GBP/USD extends UK PMI-led gains, hits fresh session peak

The GBP/USD pair was seen building on to UK PMI-led up-move beyond 1.2600 handle and is now trading at multi-day tops near 1.2635 region. 

Data released on Wednesday showed that UK manufacturing sector kicked-off 2017 on a stronger note, with the UK manufacturing PMI for January coming-in at 55.9. The reading was slightly lower to previous month's reading of 56.1 but was in-line with market expectations and helped the pair to build on to yesterday's sharp rebound from 50-day SMA support near 1.2415-10 region.

With UK economic data out of the way, broader sentiment surrounding the greenback regains spotlight as traders now look forward to the release of ADP report, US ISM manufacturing PMI and the outcome of two-day FOMC meeting, later during the day. Investors' attention would remain on the accompanying rate statement, which would looked upon for some fresh clues over next Fed rate-hike action and for some immediate respite for the US Dollar bulls. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Technically, the pair bounced sharply on Tuesday from the 1.2410 price zone, where it has the 38.2% retracement of its latest bullish run, while in the 4 hours chart, technical readings present a neutral-to-bullish stance, as the price holds above a horizontal 20 SMA, whilst technical indicators hover around their mid-lines, with modest upward slopes."

She further writes, "Above the daily high of 1.2620, the pair can rally up to the mentioned 1.2670 region, with further gains targeting the 1.2730 price zone. Below 1.2560 on the other hand, the pair can see some intraday declines, with 1.2520 and 1.2470 as the next short term supports."