GBP/USD Forecast: poised to extend Thursday's strong rally, 1.2630-50 seems achievable

Both the GBP/USD and the EUR/USD majors consolidated previous session's strong gains led by persistent greenback selling interest. On Thursday, the US Dollar drifted lower across the board after comments from the US Treasury Secretary Steve Mnuchin, during an interview on CNBC, failed to provide any details of the proposed tax reforms. Continuous uncertainty over the timing for the implementation of Trump's fiscal policies further diminished prospects of a rate-hike move at the Fed's upcoming meeting in March, against the backdrop of Wednesday's less hawkish FOMC meeting minutes.

On the economic data front, traders on Friday would take clues from the release of New Home Sales and Revised UoM Consumer Sentiment index from the US. In absence of any relevant economic releases during European trading session, the US Dollar price-dynamics would remain a key driver of any momentum in the FX market.

GBP/USD

Apart from broad based US Dollar weakness, the British Pound got an additional boost after a survey from the British Retail Consortium showed retail sales volumes to rise again in February. The GBP/USD pair surged through 1.2500 psychological mark and jumped to its highest level since Feb. 9, possibly confirming a break-out of its near-term trading range.

The pair is now sustaining its move above 23.6% Fibonacci retracement level of 1.1987-1.2706 recent leg of recovery and hence, a follow through buying interest above 1.2580-85 level has the potential to lift the pair further beyond 1.2600 handle towards 1.2630-35 horizontal resistance. The momentum could further get extended towards 1.2675 resistance area ahead of 1.2700 round figure mark.

Meanwhile on the downside, any weakness below 1.2535 level might now be bought into and hence, si likely to limit any further downslide near 1.2500 handle. Only a decisive break back below 1.2500 mark, leading to a subsequent drop below 1.2470 level, might negate near-term bullish expectations and drag the pair back towards 1.2430 intermediate support ahead of 1.2400 important confluence support, comprising of 100-day SMA and a short-term ascending trend-line.

EUR/USD

The EUR/USD pair extended sharp recovery from Wednesday's six-week lows and gained traction for the second consecutive day on Thursday. The recovery lifted the pair beyond 23.6% Fibonacci retracement level of 1.0829-1.0494 downslide but stalled just short of 1.0600 handle. The 1.0600 region also coincides with a short-term descending trend-line resistance and hence, a convincing strength above this important resistance seems to trigger a short-covering rally towards 1.0630 horizontal resistance before the pair moves beyond 50% Fibonacci retracement level near 1.0660 region and head towards testing 1.0675-80 strong resistance.

Conversely, a subsequent retracement below 1.0565-60 immediate support has the potential to drag the pair back towards 1.0530 horizontal support. Sustained weakness below 1.0530 level would turn the pair vulnerable to once again break below 1.0500 psychological mark and aim towards testing 1.0480 support, which if broken seems to open room for continuation of the pair's near-term downward trajectory towards 1.0400 round figure mark.