GBP/USD struggling below 1.2250 level

The GBP/USD pair struggled to build on early recovery move and ran through some fresh offers during early NA session.

Currently trading around 1.2240 region, the pair failed to gain any traction after disappointing US goods trade balance data that showed an unexpected increase in deficit during November, to a seasonally adjusted annual $65.3 billion, larger than consensus forecast of $61.5 billion deficit. Meanwhile, initial jobless claims fell by 10,000 to 265K but were mostly in-line with 264K expected.

Looking at the broader picture, the pair's inability to sustain early recovery move from 2-month lows seems to suggest the underlying weak trend, which is likely to be reinforced once the pair decisively breaks through 1.2200 handle. Hence, it would be prudent to wait for a decisive break below the said handle in order to confirm near-term breakdown and continuation of the pair's near-term downward trajectory.

Technical levels to watch

Bulls would be disheartened if the pair breaks below Wednesday's closing support near 1.2225 level below which the pair is likely to accelerate the slide back towards 1.2200 handle. A convincing break below 1.2200 mark has the potential to continue dragging the pair further towards its next major support near 1.2100 mark, with 1.2160 horizontal level acting as intermediate support. 

On the upside, 1.2275-80 area now seems to have emerged as immediate resistance and is closely followed by resistance at 1.2300 handle. A decisive strength above 1.2300 mark should lift the pair towards 1.2325-30 horizontal resistance above which a fresh bout of short-covering should assist the pair back towards reclaiming 1.2400 round figure mark.