GBP/USD holds steady on Tuesday amid subdued USD demand, albeit lacks bullish conviction.
The divergent Fed -BoE policy expectations turn out to be a key factor acting as a headwind. The technical setup suggests that the path of least resistance for the pair is to the downside. The GBP/USD pair struggles to capitalize on the overnight bounce from the 1.2300 mark, or its lowest level since November 14 and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade around mid-1.
Nevertheless, the GBP/USD pair seems vulnerable to extending the downtrend from the YTD peak touched in March. In the meantime, any meaningful recovery is likely to confront stiff resistance near the 1.2400 support breakpoint, which if cleared might trigger a short-covering rally and lift spot prices to the 1.2465-1.2470 region. The momentum could get extended further, though is more likely to remain capped near the 1.2500 psychological mark.
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