GBP/USD slips below 1.22 handle after US macro data

The GBP/USD pair extended disappointing UK wages growth data-led retracement and slipped below the 1.2200 handle, albeit maintained its positive bias following US macro releases. 

Spot ran through some fresh offers after data released from the US showed headline inflation, as measured by CPI, rose to 2.7% y-o-y during February, while core CPI came-in at 2.2%. 

Continuing with the US macro data, monthly retail sales recorded a dismal growth of 0.1% on monthly basis, while core sales came-in at 0.2% for the month of February. 

Today’s US economic releases were bang on consensus estimates mostly in-line with estimates and provided a minor lift to the US treasury bond yields, eventually assisting the US Dollar to pare some of its early losses. 

Earlier on Wednesday, the pair got a boost from a poll result (conducted by The Times), revealing 57% of the Scotts rejected proposal for second independence referendum, which trigger a short-covering bounce to the session peak near mid-1.2200s. 

The bullish spike, however, ran through fresh offers after data released from the UK showed average earnings growth slowed to 2.2% during three months to January as compared to 2.6% growth recorded previously. 

An unexpected drop in the number of people claiming unemployment-related benefits, and the unemployment rate, has helped the pair to hold in positive territory through early NA session.

Investors now brace for the highly anticipated Fed rate-hike action and keenly await the latest update on the policymakers' economic projections, which would provide some fresh impetus for the pair's near-term directional move. Heading into the big event risk, repositioning trade should continue to infuse volatility around the major. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "the 4 hours chart shows that the price is barely holding above a horizontal 20 SMA, whilst technical indicators have turned south after entering positive territory, now about to challenge their mid-lines. The pair has a major resistance at 1.2260, the 61.8% retracement of the January rally, and as long as below it, the risk will remain towards the downside. Above it, the pair can recover up to 1.2310 while beyond this last 1.2350, the 50% retracement of the mentioned rally comes next."

"Further slides below 1.2160, on the other hand, should favor an approach to the 1.2100 region, while below this last, 1.2070 is the next bearish target."