GBP/USD fades spike above 1.34, eyes 38.2% Fib support

• GBP/USD faded spike to 1.3431.
• Short-term technicals favor the downside.

The GBP/USD pair failed to take out the 10-day MA level of 1.3430 and fell back below 1.3380 as Irish issue lingers and investors look forward to this week's Fed and BoE meeting.

Kathy Lien from  BK Asset Management writes, "the real issue though continues to be the border with Ireland which there was very little detail other than a pledge to provide specific solutions to address the unique situation of Ireland and a promise that in the absence of a Irish border deal, the UK will maintain full alignment with the single market and customs union."

Focus on Fed

The USD could remain bid as the Fed is widely expected to hike rates by 25 basis points on Wednesday. However, there is a risk that the greenback could take a hit following the rate hike (sell the fact). Also, the dollar could take a beating of the Fed scales back its hawkish interest rate forward guidance.

UK data heavy week, eyes BOE meeting

Investors look forward to a string of UK data - CPI, labor data & wage growth numbers, and retail sales - due later this week. Meanwhile, the Bank of England (BoE) may largely endorse a wait-and-see approach ahead of 2018.

GBP/USD Technical Levels

The spot was last seen trading around 1.3375. A daily close below 1.3354 (38.2% Fib R of Nov. 3 low - Nov. 30 high) would open up downside towards 1.3294 (50% Fib R) and 1.3243 (50-day MA). On the higher side, breach of resistance at 1.34 (zero levels) could yield 1.3430 (10-day MA) and 1.3440 (4-hour 50-MA).