GBP/USD extends recovery above 1.2450, will it sustain?

Despite prevalent risk-off environment and broad US dollar strength, the GBP/USD pair extends its recovery from 1.2420 lows, largely on the back of profit-taking. Investors look to unwind their GBP shorts and take profits off the table ahead of the US macro releases, which may have a significant impact on the pair.  

However, it remains to be seen if the spot can sustain the recovery mode, as worse-than expected UK manufacturing and construction PMI reports continue to dent the sentiment around the GBP. The UK construction sector activity arrived at 52.2 versus 52.4 expectations and 52.5 last.

Markets now eagerly await fresh incentives from the US trade and factory orders data, which will be followed by Fedspeaks later in the NA session.

GBP/USD Levels to consider            

Valeria Bednarik, Chief Analyst at FXStreet notes, “In the 4 hours chart, the 20 SMA capped the upside ever since the day started, with the price now developing far below it as the indicator stands around 1.2500, whilst technical indicators have recovered within negative territory. Additionally, the 200 EMA comes at 1.2410, acting as immediate support. A break below it should lead to an extension down to 1.2370, March 29th low, en route to 1.2330.”

“Above 1.2450, the pair can recover up o the 1.2490/1.2500 region, but selling interest is expected to surge around this last and keep the upside contained, “Valeria adds.