GBP/USD drops toward 1.35 on Carney's remarks at IMF
The GBP/USD pair came under a renewed selling pressure during the NA session and lost around 50-pips in the last 10 minutes to refresh is daily low at 1.3504. As of writing, the pair was trading at 1.3530, losing 0.5% on the day.
Following last week's impressive rally, the cable started the week consolidating its gains and struggled to push higher. After spending the last couple of hours in a tight range around mid-1.35s, the pair lost its footing on the Bank of England Governor Carney's comments at the 2017 Michel Camdessus Central Banking Lecture at the IMF Headquarters in Washington DC.
Although Carney didn't say anything that would be seen as him undermining last week's decisions, he seemed a little reluctant as he said that the majority of the MPC saw that some withdrawal of stimulus would likely be needed in coming months if slack continues to be run down. Carney also reiterated that any rate hikes were expected to be gradual and limited. Moreover, the cable's overbought nature would require a more hawkish tone from Carney to fuel another rally.
- Carney Speech: Any rate hikes are expected to be gradual and limited
On the other hand, the US Dollar Index is preserving small gains during the NA session, making it hard for the pair to recover its losses. Amid a lack of significant catalysts, the DXY is gaining 0.13% at 91.77 at the moment.
- US Dollar rebounds to 91.70, daily highs
Technical outlook
Despite today's retreat, the RSI on the daily graph is still above the 70 mark, suggesting that the correction could extend in the near-term. 1.3500 (psychological level) aligns as the initial support. A daily broke below that level could allow the pair to fall further towards 1.3380 (Sep. 15 low) and 1.3180 (Sep. 14 low). On the upside, 1.3615 (Sep. 15 high) is the first technical resistance ahead of 1.3660 (Jun. 24/Brexit referendum closing level) and 1.3700 (psychological level).
- GBP/USD initial test seen at 1.3622/70 – Commerzbank