GBP/USD clawing back into 1.40, looking for a reprieve from the sell-off

• The GBP is staging a mild comeback even as the USD continues to rise on advancing Treasury yields.
• A clear calendar for Wednesday leaves the Sterling free to focus on Brexit and the BoE's stance ahead of the May rate call.

The GBP/USD pair is flat, but testing higher heading into Wednesday's European markets, trading near 1.3990.

The Sterling managed to catch a small lift on Tuesday after five straight days of declines against the Greenback, which started off as a broad market recovery and developed some wheels as US 10-year Treasuries built into and then crossed over the key 3% yield mark. The Sterling managed to dig in its heels and climb slightly from Tuesday's bottom of 1.3918, reaching a high of 1.3996 in the Wednesday overnight session.

GBP/USD: data ignored, all about BoE and Brexit - Scotiabank

Despite public borrowing figures missing the mark yesterday, government books have so far balanced in the fiscal year-to-date for the first time since 2002, and the GBP still managed to stage a mild recovery as traders are currently focused entirely on the Bank of England (BoE) ahead of their May rate decision, and Brexit developments as the EU and the UK continue to try and hash out a successful trade agreement ahead of the March Brexit finalization deadline.

GBP/USD analysis: shy recovery not enough to confirm a temporal bottom

GBP/USD Levels to watch

While Scotiabank analysts noted that the Pound could rally into the 1.4020 area, the overall technical outlook remains soft for the GBP looking forward, and as FXStreet's Chief Analyst Valeria Bednarik noted earlier, even a modest recovery still leaves the pair deeply in bearish territory: "after the latest plunge, the GBP/USD pair is well below the 23.6% retracement of such slide, at 1.4025 and as long as below the level, chances are still to the downside. Technical indicators in the 4 hours chart have recovered from oversold territory, but remain below their mid-lines, while the 20 SMA extended its slide and its currently around 1.4000, also limiting chances of an upward extension."

Support levels: 1.3960 1.3920 1.3880   

Resistance levels: 1.3990 1.4025 1.4060