GBP/USD extends US data-led recovery move

The greenback buying interest stalled after US economic releases, with the GBP/USD pair recovering around 40-pips after dropping to sub-1.2500 levels. 

Currently trading around 1.2530 region, the pair caught some fresh bids after data released from the US showed that Personal Income rose 0.3% m-o-m in December (against 0.4% growth expected), while Personal Spending surprised on the upside and came-in to show a monthly rise of 0.5% versus 0.4% expected. Meanwhile, the Fed's preferred inflation measure - Core PCE Price Index matched previous month's reading and recorded a yearly rise of 1.7% in December. 

Mixed US economic data failed to extend support to the greenback's solid recovery move, with the key US Dollar Index retreating from multi-day tops in the 101.00 neighborhood, and provided some immediate respite for the major. 

Later during the day, existing homes sales data from the US would now be looked upon for some fresh trading impetus, while the broader trend would be determined only after this week's important monetary policy decisions from the Fed and BoE, and the keenly watched US monthly jobs report (NFP). 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Mixed US data helped the pair bounce, although the risk remains towards the downside, given that in the 1 hour chart, the price remains below its 20 SMA, whilst the Momentum indicator keeps heading south within bearish territory. The RSI indicator in the mentioned chart, however, has bounced from oversold territory, indicating some buying interest aligned around the 1.2500 level. In the 4 hours chart, technical indicators have lost their bearish strength, but remain within negative territory, whilst the 20 SMA has turned flat, now around 1.2580. Renewed selling pressure below the mentioned daily low should favor additional declines towards the 1.2400/20 region."