GBP/USD reverses UK data-led tepid gains, back below 1.25 mark

The GBP/USD pair failed to extend better-than expected UK manufacturing data-led bounce and has now retreated back below 1.25 psychological mark.

Data released on Friday showed the UK industrial production recorded a m-o-m growth of 1.1% in December, while manufacturing production grew 2.1% during the same period. The data confirmed a strong end for 2016 and assisted the pair to recover early lost ground to session low near 1.2465 region.

The up-move, however, lacked momentum and is currently trading around 1.2490-85 region, amid renewed optimism around Trump's reflation policies that seems to have revived the greenback's well-established post-election bullish trend. In fact, the key US Dollar Index built on previous session's strong up-move and is currently placed at the highest level since late Jan.

Friday’s US economic docket features the release of import prices and Preliminary UoM consumer sentiment index, which would be looked upon for some fresh trading impetus during NA session.

Technical levels to watch

Immediate support on the downside is pegged at 100-day SMA near 1.2450 region and is closely followed by 50-day SMA support near 1.2430 area. A decisive break below this important support would turn the pair vulnerable to break below 1.2400 handle and head towards testing weekly lows support near 1.2350-45 region.

On the flip side, bullish momentum above session peak resistance near 1.2520 level might continue to face supply at 1.2550 level. However, a convincing break through this important barrier, leading to a subsequent move through 1.2580 resistance, has the potential to lift the pair beyond 1.2600 handle, towards its next important resistance near 1.2655-60 area.