GBP/USD off lows, still deep in the red below 1.32 handle

   •  A goodish pickup in the USD demand prompts some long-unwinding trade.
   •  GBP further weighed down by renewed uncertainty over backstop agreement.
   •  Traders now eye US consumer sentiment/Fedspeak for some fresh impetus.

The GBP/USD pair extended its retracement slide from an intraday high level of 1.3258, or fresh three-week tops, and refreshed daily lows in the last hour.

The pair snapped three consecutive days of a winning streak and was now seen retreating farther below the 1.3200 handle, eroding all of its gains recorded in the previous session.

A goodish pickup in the US Dollar demand was seen as one of the key factors behind the pair's initial leg of retracement slide. With investors looking past Thursday’s softer US consumer inflation figures, a fresh leg of an upsurge in the US Treasury bond yields helped the greenback to regain positive traction.

The British Pound was further weighed down by renewed uncertainty around the backstop agreement after the UK PM spokeswoman Alison Donnelly said that May will never agree to backstop that will trap the UK in a customs union permanently.

Adding to this, possibilities of some intraday trading stops being triggered below the 1.3200 handle could also be one of the factors behind the pair's crack of around 30-40 pips during the early North-American session.

On the economic data front, the US import price index climbed more than expected, by 0.5% m/m in September, albeit did little to influence the price action, with the pair quickly recovering around 20-pips from lows touched in the last hour. 

Traders now look forward to the release of Prelim UoM Consumer Sentiment, which along with a scheduled speech by Atlanta Fed President Raphael Bostic will now be looked upon for some fresh impetus on the last trading day of the week.

Technical levels to watch

A subsequent fall below the 1.3165 level is likely to get extended towards the 1.3125-20 intermediate support en-route 100-day SMA support near the 1.3100 round figure mark. On the flip side, momentum back above the 1.3200 handle now seems to confront resistance near the 1.3235 zone, above which the pair is likely to head towards testing the 1.3165-70 supply zone.