GBP/USD slides further below 1.2400 handle

The GBP/USD pair extended its reversal from daily peak level of 1.2440 and has now dropped to a fresh session low during early US trading session.

Currently trading around 1.2360 region, the pair's recovery above 1.2400 handle during late Asian / early European session ran through fresh offers and the pair resumed with its near-term downward trajectory amid thin liquidity conditions. 

In absence of any major economic releases, US Dollar price dynamics, which is benefitting from easing risk aversion after the second US Presidential debate, had been the sole driver of the pair's movement on Monday.

Meanwhile, Brexit-led worries continue to weigh on the British Pound with the major extending its slide further on Monday. A scheduled bank holiday in the US is likely to make the pair dependent on the prevalent risk sentiment in the US equity markets before liquidity returns to the market on Tuesday.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "According to the 4 hours chart, GBP/USD technical readings are beginning to recover some meaning after Friday's sharp decline, although indicators are still in extreme oversold levels, recovering partially, but far from supporting a steeper recovery. In the same chart, the 20 SMA has extended its decline, and is currently around 1.2560."

"The highest level reached after the latest slump is 1.2476, the level to surpass to confirm further gains up to 1.2520, first and to 1.2600 should the dollar come under selling pressure."

"Below the mentioned daily low, on the other hand, the risk turns towards the downside, with scope then to test the 1.2300 region."