GBP/USD testing key support near 1.3480 ahead of BOE survey, US PPI

• Hovers around 8-day lows.
• Further downside in play?
• BOE Credit Conditions survey on tap.

The GBP/USD pair extends its weakness into a third day today, looking vulnerable below a break of the key confluence zone near 1.3480 levels.

GBP/USD targets 1.3400 ahead of US PPI?

The spot remains better offered below the 1.35 handle in early Europe, as the US dollar keeps its recovery mode intact versus its main competitors, with concerns easing over China-US bond stance, after China’s foreign exchange regulator said that China consideration of slowing or halting its purchases of US Treasury bonds could be based on wrong information. The USD index rebounded to 92.25 levels on the Chinese news, having found some support just ahead of the 92 handle.

Moreover, a corrective slide seen in Treasury yields and weaker global stocks dent the appetite for higher-yielding assets, adding to the weight on the risk currency, the GBP. Further, looming uncertainty over the Brexit deal amid the UK PM May’s cabinet reshuffle also keep the sentiment around Cable undermined.

Meanwhile, “traders now look forward to the release of PPI figures and the usual weekly jobless claims from the US for fresh impetus. In the meantime, the BOE's Credit Conditions Survey report might influence the sentiment surrounding the British Pound and provide some short-term trading opportunities,” Haresh Menghani, Analyst at FXStreet, notes.

GBP/USD Technical Levels

Karen Jones, Analyst at Commerzbank, writes: “GBP/USD continues to consolidate/ease lower from just below recent highs at 1.3614/58, made in September and January. The cross is bid above the 1.3300 level. Intraday dips lower should find initial support circa 1.3475/32. It has recently broken above the 2014- 2017 downtrend and this has introduced scope to the 1.3658/71 September high and double Fibonacci retracement.”