GBP/USD rejected near 1.3400 mark, surrenders early gains

• Investors looked past today’s upbeat UK construction PMI.
• A pickup in the US bond yields helps ease USD bearish pressure.
• Technical selling emerges ahead of 100-SMA on the 4-hourly chart.

The GBP/USD pair faced rejection near the 1.3400 handle and quickly retreated around 40-pips from 1-1/2 week tops touched earlier.

The pair initially built on last week's recovery move from the 1.3200 neighborhood, or 6-month lows, and was further supported by some renewed US Dollar selling bias, led by escalating trade tensions. The up-move got an additional boost following the release of yet another surprisingly stronger-than-expected UK macro data, this time coming in the form of UK construction PMI.

The bullish momentum, however, remained capped below 100-period SMA on the 4-hourly chart and already seems to have lost steam amid a goodish pickup in the US Treasury bond yields, which now seems to have eased bearish pressure surrounding the greenback, at least for the time being.

It would now be interesting to see if the pair is able to find any dip-buying interest at lower levels or the current pull-back marks the end of recent corrective bounce amid uncertainty surrounding Brexit talks and the recent dovish tilt by the BoE.

Technical levels to watch

Any subsequent retracement is likely to find strong support near the 1.3310-1.3300 region, below which the pair is likely to resume with its prior depreciating slide and head back towards retesting the 1.3245 support area.

On the flip side, the 1.3400 handle might continue to act as an immediate strong hurdle, which if cleared might trigger an additional short-covering move towards the 1.3460-65 supply zone en-route the key 1.3500 psychological mark.

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