GBP/USD turns sharply low, drops to session low

The GBP/USD pair was seen building on to its strength above 1.2700 handle and jumped to a fresh daily peak during early NA trading session. 

The pair, however, quickly retraced from higher levels and has now dropped below 1.2700 handle, heading back towards the lower end of daily trading range. 

The US Dollar attempted to recover some of its lost ground, as investors turned cautious ahead of the Fed monetary policy meeting, and has been the key contributor to the pair's sharp retracement from 5-day highs touched in the aftermath of upbeat UK CPI print. 

From technical perspective, the pair's inability to extend its strong up-move, and yet another rejection from just below 100-day SMA, suggests that the near-term recovery trend might have lost steam and the pair might resume with its prior weakening trend. Hence, a follow through selling pressure below session low would confirm rejection and turn the pair vulnerable to slide further in the near-term.

Technical levels to watch

Weakness below 1.2660 (session low) is likely to find support near 1.2625-20 region below which the pair is likely to break below 1.2600 handle and head towards testing 1.2580 support area. On the upside, 1.2700 handle now becomes immediate resistance to watch for, which if conquered could assist the pair beyond 1.2730 (session peak area) towards testing 100-day SMA important resistance near 1.2765-70 region.