GBP/USD recovers from weekly lows, trades above 1.3150

The GBP/USD pair touched its lowest level in a week a couple of pips below the 1.31 mark earlier in the day but was able to stage a modest recovery in the NA session. As of writing, the pair was trading at 1.3160, losing 0.2% on a daily basis.

The IHS Markit on Tuesday reported that the Services PMI in the UK rose to 51.3 in February to beat the market expectation of 49.9. Although the upbeat reading helped the British pound gather strength against its rivals, the greenback stole the spotlight in the second half of the day and caused the pair to fall deep into the negative territory. Furthermore, several news outlets today reported that no breakthrough was expected at today's meeting between the EU's Barnier and the Attorney General Cox to further weigh on the GBP.

In the NA session, the greenback met a fresh buying wave after the ISM's Non-Manufacturing PMI rose to 59.7 in February from 56.7 in January with the New Orders sub-index rising to its highest level since 2005. Commenting on the data, "The service sector has not followed the manufacturing lead lower but turned up to 59.7, well above forecast and back to the elevated levels of late last year. The US  consumer may know something the factory owners do not," said FXStreet Senior Analyst Joseph Trevisani. Additionally, the IBD/TIPP Economic Optimism Index jumped to 55.7 in March to beat the analysts' estimate of 51.2 and new home sales increased by 3.7% to lend further support to the greenback. 

At the moment, the US Dollar Index, which touched a new 2-week high of 97.01 in the session, is up 0.27% on the day at 96.90 and remains on track to close the fifth straight day in the positive territory.

Technical levels to consider

The pair could encounter the first support at 1.3100 (daily low) ahead of 1.3055 (20-DMA) and 1.3000 (psychological level/50-DMA). On the upside, resistances are located at 1.3200 (daily high/psychological level), 1.3255 (Mar. 4 high) and 1.3285 (Mar. 1 high).