GBP/USD retreats toward 1.2475 as US dollar trims losses

• US data show better-than-expected numbers from the service sector.
• Greenback recovers ground during the American session as equity rally in Wall Street eases.

The GBP/USD pair pulled back after the beginning of the American session amid a recovery of the US dollar. The greenback trimmed losses following better-than-expected US economic data.

Cable peaked at 1.2520 before turning to the downside. Recently fell to 1.2478 and as of writing, trades at 1.2495, modestly higher for the day, holding a modest bullish bias. The pair, like last week, lost strength above 1.2500 and pulled back.

The retreat took place after US economic data. The ISM Non-manufacturing Index jumped to 57.1, significantly above the 50.1 expected. Previously the Service PMI Markit also showed better-than-expected numbers. The dollar trimmed losses after the reports as Wall Street indexes moved off highs.

Technical outlook

The bullish short-term bias in GBP/USD is likely to remain intact as long as it holds above 1.2475 (20-SMA in 4-hour chart); below the next support is seen at 1.2435. On the upside, a consolidation above 1.2520 would clear the way to more gains in GBP/USD, initially to test 1.2540/45 (late June highs).