GBP/USD extends correction below 1.2800

The pound lost momentum in the market during Wednesday’s American session and reached fresh lows. The currency is trimming part of yesterday’s gains. GBP/USD printed a fresh daily low at 1.2778 and it was trading slightly above the lows showing a bearish tone. 

Correcting after sharp rally 

Cable rose almost 300 pips yesterday and today is losing around 50. The correction so far seems like a normal corrective move and GBP/USD still remains above key technical levels. 

Earlier today, UK Parliament backed PM May call for an election. The House of Commons approved by 522 to 13 the elections. The pair rose modestly after that but it found resistance at 1.2860 and lost strength. 

GBP sees a calmer session as Parliament gives the green light

The current bearish tone is also supported by a recovery of the US dollar across the board amid a decline in US bonds and equity prices in Wall Street. 

Technical levels 

At the moment it trades at 1.2780/87; if it rises above 1.2810 the pound could gain momentum for another test of 1.2860. If the correction continues, potential support levels might be located at 1.2740, 1.2685/90 (4-hour 20-SMA) and 1.2595 (short-term uptrend line).