GBP/USD retakes 1.35 mark, but lacks follow through traction

The GBP/USD pair reversed an early dip to 1.3470-65 area and spiked back closer to session tops on disappointing US economic data, albeit quickly retreated thereafter.

Currently trading around the 1.3510-15 region, the pair caught some fresh bids and was being supported by some renewed US Dollar selling bias after data released from the US showed current account deficit jumped to $123.1 billion, marking 2.6% of GDP, during the second quarter of 2017 as compared to previous quarter's deficit of $113.5 billion (revised lower from $116.8 billion reported earlier). 

Separately, the disappointing housing starts data was largely negated by surprisingly stronger building permits data. Meanwhile, the market seems to have ignored higher-than-expected rise in the US import and export prices, both rising by 0.6% m-o-m, the fastest pace since June 2016. 

The pair, however, lacked any strong follow through momentum in wake of an unconfirmed news that Boris Johnson will resign before the weekend if Theresa May opposes his Brexit demands.

Next of relevance for the pair would be the release of UK monthly retail sales data and the much awaited FOMC decision, both due on Wednesday and would help investors determine the next leg of directional move for the major.

Technical levels to watch

Bulls would try and defend the key 1.35 psychological mark, which if broken could drag the pair back towards 1.3470-65 support area. A follow through weakness could get extended towards 1.3435 level.

On the upside, immediate resistance is pegged near mid-1.3500s, above which the pair is likely to aim towards conquering the 1.3600 handle before eventually darting towards yearly tops resistance near the 1.3615-20 region.