GBP/USD dips to fresh two-week lows

As the US dollar Index surged to a new three-week high above 101 during the NA session, the GBP/USD pair slid further towards 1.2370. As of writing, the pair is down 0.78% on the day at 1.2372.

Although no clear fundamental catalyst was seen behind the sharp upsurge in the greenback, the determined performance of the US Treasury bond yields provided an additional boost with the 10-year reference gaining 1.15% at 2.37%.

Earlier today, Manufacturing and Industrial Production figures from the UK came in below expectations. In the meantime, the disappointing headline payrolls number from the United States only had a temporary negative impact on the greenback as the details of the report signaled towards a stable labor market. Tom Simons, an economist at Jefferies LLC in New York told Bloomberg that aside from the payroll data, all the other underlying details were encouraging including the steady participation rate.

• UK industrial production contracts further in Feb, surprises negatively

In the US afternoon, New York Fed President William Dudley suggested that the Fed should avoid simultaneous policy moves and it could start shedding bonds later this year. CME Group FedWatch Tool shows that the markets are pricing a 63.4% probability of a 25 bp rate hike in June. 

• Fed's Dudley: Rates will be primary policy tool

Technical outlook

The initial hurdle for the pair could be seen at 1.2400 (50-DMA/100-DMA) before 1.2450 (Fib. 61.8% of Dec/Jan fall) and 1.2500 (psychological level). On the downside, with a break below 1.2360 (Fib. 50% of Dec/Jan fall), the pair could aim for 1.2270 (Fib. 38.2% of Dec/Jan fall) and 1.2200 (psychological level).