GBP/USD quickly reverses a mid-European session dip to 1.4020

   •  Investors looked past today’s upbeat UK manufacturing PMI.
   •  A modest USD rebound prompts some selling ahead of 1.41 handle.

The GBP/USD pair quickly reversed a dip to an intraday low level of 1.4021 and has now recovered around 40-50 pips from session lows. 

The pair initially jumped three-day highs, closer to the 1.4100 handle in reaction to the release of better-than-expected UK manufacturing PMI, coming in at 55.1 for March, but once again failed ahead of the 1.4100 handle amid resurgent US Dollar demand.  

A goodish pickup in the US Treasury bond yields partly offset concerns about a possible full-blown US-China trade war and helped the greenback to bounce back from the lower level. This coupled with possibilities of some trading stops being triggered further collaborated to the pair sudden drop to session lows. 

The downfall lacked any obvious catalyst and hence, was quickly bought into. The pair bounced back to 1.4065 area and might now be eyeing for the third consecutive day of gains amid empty US economic docket. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes, “the short-term picture is neutral according to the 4 hours chart, as the Momentum indicator hovers around its 100 level, while the RSI indicator already gyrated south, around 42. In the same chart, the pair stands a few pips above a bearish 20 SMA, and the 38.2% retracement of its March rally, this last at 1.4040 providing an immediate support. A break below this last should open doors for a test of 1.4010, last week's low, ahead of a strong static support around 1.3985.”