GBP/USD extends recovery to 1.2450 region

After an initial dip closer to Thursday's three-week lows, the GBP/USD pair managed to recover early lost ground and is now building on to its recovery back above 1.2400 handle. 

Currently trading around 1.2440 region, testing session peak, a mild greenback retracement helped the pair to register a minor recovery on Friday following the post-Fed slump of nearly 350-pips in just 2-trading sessions. The pair still remains on track for its second consecutive week of declines. 

On Thursday, BoE decision to keep interest rates, and the size of its asset purchase program, unchanged failed to provide any respite for bulls. Moreover, solid US economic data - CPI, weekly jobless claims and regional manufacturing indices, added on to the hawkish Fed statement and provided an additional boost to the already stronger greenback, lifting the overall US Dollar Index to its highest levels in more than 13 years and dragging the GBP/USD pair to a three week low.

In absence of any major market moving releases from UK, traders on Friday will take cues from US housing market data - building permits and housing starts, in order to grab some short-term trading opportunities. However, the near-term trend would remain dependent on the broader US Dollar price dynamics, which remains underpinned by expectations of faster Fed rate-tightening cycle in 2017.

Technical levels to watch

From technical perspective, the pair has decisively broken below a short-term ascending trend-channel and hence, any corrective bounce back above 1.2450 level might now confront strong resistance at the trend-channel support break-point, turned resistance, near 1.2500 psychological mark. On the downside, renewed weakness back below 50-day SMA support near 1.2400 region now seems to open room for continuation of the pair's near-term downward trajectory towards 1.2300 horizontal support.