GBP/USD reverses a dip to sub-1.2400 levels post-US GDP, focus shifts to FOMC
- GBP/USD witnessed some intraday selling amid resurfacing Brexit concerns.
- The prevalent USD selling bias helped limit any deeper losses for the major.
- The US economy contracted sharply by 4.8% annualized pace in the first quarter.
The GBP/USD pair reversed a dip to sub-1.2400 levels and has managed to recover around 25 pips from daily swing lows.
The pair failed to capitalize on its early uptick and started retreating from the vicinity of the key 1.2500 psychological mark. The pullback picked up pace after the UK Foreign Secretary Dominic Raab reiterated that the Brexit transition will end at the end of this year.
The comments further fueled concerns about hard-Brexit, which coupled with increasing prospects of an extended lockdown in the UK took its toll on the British pound. The negative factor overshadowed the prevalent US dollar selling bias and exerted some pressure on the major.
The pair retreated around 100 pips, albeit once again showed some resilience below the 1.2400 round-figure mark following the release of the US GDP print. The advance report showed that the US economic activity contracted sharply by 4.8% annualized pace during the first quarter of 2020.
The data further illustrated the extent of economic damage caused by coronavirus-induced lockdown, which kept the USD bulls on the defensive and extended some support to the major. The uptick, however, lacked any bullish conviction ahead of the latest FOMC policy decision.
Technical levels to watch