GBP/USD keeps the red near daily lows, around mid-1.2600s
- GBP/USD witnessed some aggressive long-unwinding trade on Thursday.
- Resurgent USD demand was seen exerting some heavy pressure on the pair.
- Bears might now wait for some follow-through selling below 200-day EMA.
The strong intraday USD buying picked up some additional pace in the last hour and pushed the GBP/USD pair further below mid-1.2600s, back closer to weekly lows.
The pair witnessed some aggressive long-unwinding trade on Thursday and extended the previous session's post-FOMC retracement slide from three-month tops – levels beyond the 1.2800 mark. The steep intraday decline was exclusively sponsored by a strong pickup in the US dollar demand.
The Federal Reserve on Wednesday offered a bleak outlook and stated that the economy is expected to contract by 6.5% in 2020. The downbeat assessment took its toll on the global risk sentiment, which, in turn, provided a strong boost to the greenback's perceived safe-haven status.
The greenback maintained its strong bid tone following the release of slightly better-than-expected US macro data – Producer Price Index for May and Initial Weekly Jobless Claims data – and continued exerting downward pressure on the GBP/USD pair.
The pair has now retreated back closer to weekly swing lows, around the 1.2620-15 region, set on Tuesday. The mentioned region coincides with 200-day EMA, which if broken will set the stage for a further near-term depreciating move for the GBP/USD pair, possibly towards mid-1.2500s.
Technical levels to watch