GBP/USD Analysis: Downside remains limited amid delayed Brexit hopes, UK PMI eyed for some impetus

The GBP/USD pair remained under some selling pressure for the second consecutive session on Friday and was corrected further from near seven-month tops, around mid-1.3300s, set on Wednesday. The British Pound was weighed down by softer UK manufacturing PMI, which fell to a four-month low level of 52.0 in February. This coupled with some renewed US Dollar buying interest, supported by a goodish pickup in the US Treasury bond yields and despite weaker US economic data, exerted some additional downward pressure and dragged the pair to an intraday low level of 1.3172. 

However, expectations of a possible delay to the fast-approaching Brexkt deadline on March 29 and softer Brexit helped limit further downside. The sudden turnaround in the Brexit outlook, especially after the UK PM Theresa May's confirmation last week that the parliament will have an opportunity to vote for a no-deal Brexit or Brexit extension if her revised Brexit deal again gets rejected on March 12, has been perceived as better than a no-deal outcome and continued underpinning the Sterling. 

The pair finally settled near the 1.3200 handle, off around 30-pips from daily lows, and posted strong gains for the second consecutive week. Meanwhile, a report from the Wall Street Journal on Sunday, saying that the US & China could reach a formal agreement at a summit around March 27, further fueled the recent optimism over a possible resolution to the long-standing US-China trade disputes and provided a minor boost to the major at the start of a new trading week. 

The pair opened with a bullish gap of over 30-pips, albeit lacked any strong follow-through as market participants now look forward to the release of UK construction PMI for some short-term trading impetus. Adding to this, the incoming Brexit-related headlines might continue to influence sentiment surrounding the British Pound and remain an exclusive driver of the pair's momentum amid absent relevant market moving economic releases from the US.

From a technical perspective, the recent pull-back might still be categorized as corrective in nature, given the recent upsurge of over 575-pips from Feb. monthly swing lows. Moreover, the bullish resilience below the 1.3200 area further reinforces the bullish outlook and hence, any meaningful slide might still be seen as a buying opportunity. The mentioned handle might continue to protect the immediate downside, below which the corrective slide could get extended but seems more likely to find decent support, rather remain limited near the 1.3100 round figure mark. 

On the flip side, the 1.3255-60 region, followed by the 1.3300 handle now seems to act as immediate resistance, which if cleared might lift the pair back towards testing multi-month swing highs, around mid-1.3300s. A follow-through buying has the potential to continue boosting the pair further towards the 1.3385 hurdle - marking 50% Fibonacci retracement level of the 1.4377-1.2396 downfall.