After a rather muted reaction to Friday's upbeat UK monthly retail sales data, renewed US Dollar selling helped the GBP/USD pair to catch some aggressive bids and rally over 100-pips intraday. The greenback initially climbed to fresh 2019 highs but lost momentum after the US President Donald Trump declared a national emergency on border security. Data released on Friday showed UK monthly retail sales growth stood at 1.0% m/m and 4.2% y/y rate. From the US, a 0.5% contraction in import prices and dismal industrial production/capacity utilization data were largely offset by stronger than expected Empire State manufacturing index and consumer sentiment index for February, but against failed to provide any meaningful impetus.
The pair opened with a minor bullish gap at the start of a new trading week and attempted to build the previous session goodish up-move further beyond the 1.2900 handle, tough Brexit uncertainties seemed to keep a lid on any strong follow-through up-move. Given the UK-EU stalemate over the Irish backstop issue, the pair remains at the mercy of incoming Brexit headlines amid absent relevant market moving economic releases either from the UK or the US and the President’s Day holiday in the US.
From a technical perspective, the pair now seems to have found acceptance above a short-term descending trend-channel and hence, seems poised to extend the positive momentum further beyond the 1.2955-60 region, last week's swing high, towards reclaiming the key 1.30 psychological mark, also nearing the very important 200-day SMA. A strong follow-through buying might negate any near-term bearish bias and pave the way for a further near-term appreciating move.
On the flip side, any meaningful retracement back below the 1.2900 handle now seems to find decent support near the trend-channel resistance break-point, currently around the 1.2840-35 region, which if broken could drag the pair further towards retesting the 1.2800 handle. Failure to defend the mentioned support might turn the pair vulnerable to aim towards challenging the 1.2700 round figure mark with some intermediate support near the 1.2750-45 zone.
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