GBP/USD recovery gains momentum, hits fresh session peak

The GBP/USD pair was seen building on to its Wednesday’s recovery move and has now reversed all of its losses posted in the previous session. 

Currently trading around 1.2275 region, the pair was seen benefiting from upbeat UK data, including UK construction PMI for December, which surpassed expectations and added to the recent slew of upbeat UK economic data and provide some immediate respite for the major. Moreover, a broad based US Dollar retracement is also collaborating to the pair’s recovery trend on Wednesday. 

It would, however, be interesting to see if the pair manages to sustain the strength and builds on to the recovery momentum amid prevailing uncertainty over the economic implication of Brexit, which might hold back investors from initiating fresh long positions and restrict any meaningful recovery in the major. 

Moreover, traders also seemed cautious ahead of FOMC meeting minutes, due later during NY session, which if reveals prospects of stronger US economic growth would reinforce expectations of additional Fed rate-hike actions in 2017 and provide fresh bullish impetus for the greenback's well-established strong bullish trend. 

Technical levels to watch

A follow through buying interest above 1.2300 handle, and a subsequent break through 1.2335-40 resistance area, is likely to trigger a short-covering rally towards 1.2400 handle ahead of 50-day SMA resistance near 1.2425 region.

On the flip side, weakness below 1.2235 immediate support might continue to take support near 1.2200 handle, which if broken decisively is likely to accelerate the slide towards 1.2160-55 intermediate support, en-route 1.2130-25 horizontal support.