- The GBP/USD remained under pressure in Asia, but losses were restricted around 1.3090 - 23.6% Fib R of 1.2921/1.3258 and 100-day MA.
- Hawkish Fed minutes and Brexit uncertainty indicate the path of least resistance for GBP is on the downside.
- A below-forecast UK retail sales reading could push the pair below 100-day MA.
The GBP/USD pair is on the defensive in Asia, having established a lower high at 1.3236 on Monday.
More importantly, the pullback from the Oct. 12 high of 1.3258 has neutralized the bullish outlook put forward by the bull flag breakout confirmed on Oct. 5.
Further, the hawkish Fed minutes and Brexit uncertainty indicate that for the near-term, the path of least resistance is to the downside.
Still, the pair managed to defend key support at 1.3090 (100-day moving average (MA) and 23.6% Fib R of 1.2921/1.3258). However, defending that level in Europe could become a tough task if the UK retail sales, due at 08:30 GMT, show a bigger-than-expected drop in consumption in September.
The market is expecting September retail sales to print at -0.4 percent month-on-month, following a 0.3 percent rise in August.
The pound may pick up a bid if the retail sales beat estimates by a big margin, although, a bullish breakout would be confirmed only above the recent high of 1.3258.
GBP/USD Technical Levels
Resistance: 1.3113 (Asian session high), 1.3193 (previous day's high), 1.325 (Oct. 12 high)
Support: 1.3090 (23.6% Fib R of 1.2921/1.3258 + 100-day MA), 1.3050 (61.8% Fib R of 1.2921/1.3258), 1.30 (psychological level)