GBP/USD recovers modestly from multi-month lows, continues to trade below 1.26

• US Dollar Index drops below the 98 handle in the early NA session.
• Core PCE Price Index in the U.S. comes in line with expectations.
• Coming up: ISM Chicago PMI and UoM Consumer Confidence Index.

After dropping to its lowest level since early January at 1.2560, the GBP/USD pair staged a modest rebound in the last couple of hours and erased a small portion of this week's losses. As of writing, the pair was trading at 1.2575, losing 0.25% on a daily basis.

Earlier today, the dismal market mood amid heightened geopolitical tensions weighed on the risk-sensitive GBP and caused the pair to stay under pressure. However, the greenback struggled to preserve its strength and helped the pair find support.

Today's data from the U.S. revealed that the core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, ticked up to 1.6% in Mar on a yearly basis from 1.5% in April as expected and remained below the Fed's target of 2%. Commenting on the data, Minneapolis Fed President Kashkari noted that the latest data showed that inflation was still low but argued that they were not yet at a point to make a shift in the policy.

The US Dollar Index, which touched its highest level in a week at 98.28 yesterday, lost its traction in the early NA session and slipped below the 98 mark. Later in the session, the ISM Chicago PMI and the UoM's Consumer Confidence Index will be looked upon for fresh catalysts. 

Technical levels to watch for