GBP/USD spikes to session tops, 1.2900 back on sight ahead of Yellen

The GBP/USD pair extended post-UK jobs data recovery move from two-week lows and has now jumped to fresh session tops near the 1.2980-85 band.

The pair attracted some strong buying interest near the 1.2800 neighborhood after surprisingly stronger UK labor market report, showing an unexpected drop in the unemployment rate and lower-than-expected claimant count changes. Adding to this, a slightly higher than expected weekly earnings growth (excluding bonus), provided an additional boost to the pair's recovery move from the lowest level since June 28.

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Meanwhile, possibilities of some stops being triggered, on a decisive move back above 1.2850-60 resistance, might have also collaborated to the pair's sharp spike of around 25-30 pips over the past hour or so. 

It would now be interesting to see if the up-move is backed by any genuine buying or is just a stop run as investors keenly look forward to the Fed Chair Janet Yellen's semiannual testimony on monetary policy outlook before the House Financial Services Committee, due later during the NY trading session.

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Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "The 4 hours chart shows that the price has bottomed intraday at the 50% retracement of the latest bullish run from 1.2588 to 1.3029, now struggling  around the 38.2% retracement of the same rally at 1.2860. In the mentioned chart, the 20 SMA maintains a sharp bearish slope, providing an immediate resistance at 1.2870, the Momentum indicator remains flat below its 100 level, whilst the RSI indicator bounced from oversold levels, but remains well below its mid-line, all of which limits chances of a stronger recovery."

"An upward acceleration through the mentioned 20 SMA could favor additional gains, up to 1.2925, while below the mentioned  daily low, next intraday supports and probable bearish targets come at 1.2770 and 1.2730" she added.