GBP/USD breaks through 1.2400 handle to hit 4-week low

After failing to conquer 1.250 psychological mark, the GBP/USD pair came under intense selling pressure and plunged below 1.2400 handle to the lowest level since Nov. 21.

The pair, however, has bounce off few pips from session low and is currently trading around 1.2370-75 band. Spot prices accelerated the downslide amid renewed greenback buying interest, with the overall US Dollar Index recovering all of its lost ground and now moving into positive territory to currently quote back above 103.00 mark, closer to last week's 14-year high touched in the aftermath of hawkish Fed statement.

In absence of any fresh fundamental development, possibilities of stops getting triggered, on a sustained break below 1.2400 handle, might have led to the pair's sharp slide in the past hour. 

With a relatively thin US economic docket, investors US Dollar price-dynamics would continue to be a sole drive for the pair ahead of a speech from the Fed Chair Janet Yellen, which would looked upon for further clarification over the hawkish interpretation of Fed's interest-rate forecast for 2017.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The 4 hours chart shows that the price retreated sharply after failing to surpass a sharply bearish 20 SMA, while technical indicators have resumed their declines within negative territory after correcting oversold conditions, indicating that the risk remains towards the downside. The immediate support comes at 1.2440, with further slides pointing for a test of the 1.2370/90 region. Beyond this last the pair has a strong mid-term support at 1.2330, expected to hold on a first attempt to break lower."

"An upward acceleration through 1.2510 is required to confirm some modest advance, with selling interest probably aligned in the 1.2540/60 price zone."