GBP/USD fades post-PMI spike to 1.2490, US ADP in focus

After having peaked at 1.2490 levels, the GBP/USD pair has entered a phase of upside consolidation, as a generalized demand for the greenback returned to markets amid a recovery in treasury yields and improving risk environment.

The USD index bounces-off 100.30 levels to now trade around 100.45 region, while the benchmark 10-year treasury yields rise +0.70% to 2.366%, extending recovery from monthly troughs.

However, the sentiment around the pound remains underpinned, with investors cheering a solid rebound seen in the UK services PMI data, after having dipped to five-month lows in February.  The UK services sector activity gauge arrived at 55.0 versus 53.5 expectations and 53.3 last.

With the UK data out of the way, focus now remains on the US ADP jobs data and BOE MPC member Vlieghe’s speech due on the cards ahead of the US open. Meanwhile, the US ISM services PMI and Fed minutes will also play a key determinant for fresh direction on the spot.

Besides, the US ADP jobs, ISM services PMI and FOMC minutes will also hog the limelight in the day ahead. BOE MPC member Vlieghe’s speech will be also closely heard for fresh hints on the BOE’s monetary policy outlook.

GBP/USD Levels to consider            

Ipek Ozkardeskaya at London Capital Group notes, “From a technical perspective, daily trend and momentum indicators remain positive; suggesting that dip-buyers in GBPUSD could continue seeing opportunity pre-100-day moving average. The 100-day moving average, 1.2410, continues lending support to Cable despite the Brexit volatility and some traders’ reluctance to purchase the pound in the middle of the EU/UK shenanigans. Resistance is eyed at 1.2496 (minor 23.6% retracement on March rise), before considering a further rise to the critical 200-day moving average, 1.2570.”