GBP/USD Forecast: Could Correct Further If Breaks Below 1.3400 Handle

On Tuesday, the GBP/USD pair struggled to sustain an early up-move back above the 1.35 hand and dropped to an intraday low level of 1.3409 in wake of persistent US Dollar buying interest. Traders even shrugged off disappointing US economic data, showing weakness in both consumer confidence and the housing sector. Moreover, Fed Chair Janet Yellen's comments reaffirmed that the central bank remains on track to continue raising interest rates gradually and underpinned greenback demand.

Meanwhile, the British Pound was also weighed down by the lack of progress in Brexit negotiations as both sides remain far apart on key issues, including the amount of Britain's bill to leave the EU and the legal status of EU citizens living in the UK.

The pair traded with a slight negative bias for the fourth straight session on Wednesday and in absence of any major market moving UK economic releases, the USD price-dynamics would remain an exclusive driver of the sentiment surrounding the major.

Technically, the pair has failed to defend a support near mid-1.3400s, marking 23.6% Fibonacci retracement level of 1.2774-1.3657 up-move and hence, seems more likely to extend its near-term corrective slide. Immediate support is pegged near the 1.3400 handle, below which the pair remains on track to accelerate the fall towards 38.2% Fibonacci retracement level support near the 1.3325-20 region.

On the upside, any up-move back above 1.3450 level might now confront strong resistance near the 1.3490-1.3500 region, which if cleared might trigger a short-covering bounce back towards 1.3575-80 horizontal resistance.