GBP/USD drops to one week lows, near 1.39 handle ahead of BOE’s inflation hearings

   •  Mixed UK jobs data triggers the initial leg of weakness.
   •  USD strength/Brexit headlines add to the downward pressure.
   •  BOE’s inflation hearings/FOMC minutes eyed for fresh impetus.

The GBP/USD pair extended its rejection slide from the key 1.40 psychological mark and refreshed one-week lows in the last hour of trading.

Bulls on Wednesday were unimpressed by mixed UK employment details, showing an uptick in the unemployment rate and the inability of earnings growth to allow real wages to push higher, and prompted some fresh selling around the major. 

The selling pressure aggravated in the last minute and was being led by news headlines, via Reuters, that the UK PM May has not changed position and still wants a Brexit transition phase of around 2 years.

This coupled with a strong follow-through US Dollar buying interest, further supported by jittery European equity markets, continued exerting downward pressure through the mid-European session.

It would now be interesting to see if bulls are able to defend the 1.3900 handle as focus shifts to the BOE's upcoming inflation report hearings before Parliament's Treasury Committee and the highly anticipated FOMC monetary policy meeting minutes.

Technical levels to watch

A convincing break below the 1.3900 handle would suggest a fresh bearish breakdown and could accelerate the fall towards 1.3870 intermediate support before the pair eventually drops to test the 1.3800 round figure mark.

On the upside, any meaningful recovery attempt is likely to confront fresh supply near the 1.3965 and any subsequent up-move might now be capped at the 1.40 handle.