- GBP/USD quickly reversed an early dip to 1.2420 region and climbed back closer to session tops.
- A modest USD strength capped the upside following the release of better-than-expected US data.
The GBP/USD pair managed to rebound over 50 pips from daily swing lows and has now moved to the top end of its daily trading range, around the 1.2480 region.
Having failed to capitalize on its early uptick, the pair witnessed some selling during the early European session and dropped to an intraday low level of 1.2420 amid a sudden pickup in the US dollar demand.
However, the fact that the USD strength lacked any obvious fundamental catalyst and was solely led by some heavy pressure surrounding the shared currency, investors refrained from placing fresh bearish bets around the major.
This coupled with the prevalent risk-on mood, as depicted by a strong rally in the US equity markets, further dented the greenback’s relative safe-haven status and assisted the pair to attract some dip-buying ahead of the 1.2400 mark.
Meanwhile, the upside seemed limited and the pair remained below the key 1.2500 following the release of better-than-expected US ISM Non-Manufacturing PMI, which came in at 41.8 for April as compared to 36.8 anticipated.
The data did little to impress traders or provide any meaningful impetus. Hence, it will be prudent to wait for some strong follow-through buying beyond the 1.2500 mark before positioning for any further near-term appreciating move.
On the flip side, bearish traders are likely to wait for a sustained break below the 1.2400 mark to confirm that a near-term top might have already been formed near the very important 200-day SMA and positioning for any further fall.
Technical levels to watch