GBP/USD Fades a Spike to 1.4468 After UK Construction PMI, Drops Back to 1.4435
After an initial downward spike to 1.4417 on disappointment from UK construction PMI, the GBP/USD pair surged and extended its Asian session gains before retracing back to currently trade near 1.4435 level.
According to the data released a short while ago showed activity in the UK construction industry slowed further in May but remained in expansion territory. The Markit/CIPS UK Construction PMI fell to 51.2 in May, down from 52.0 in April and only slightly above the critical 50.0 no-change mark. The reading signaled the weakest rise in business activity in almost three years.
Immediately after the release the pair jumped to 1.4468 level and retraced back below 1.4450 as uncertainty surrounding 'Brexit' referendum might continues to cap any further up-move for the pair.
Thursday's key focus, however, remains on the ECB monetary policy decision, which might trigger volatility in the EUR/GBP cross and eventually influence on the GBP/USD major.
Technical levels to watch
On the upside, immediate resistance is pegged near 1.4480-1.4500 handle, beyond which the pair could attempt to extend the recovery towards 1.4540 resistance. This 1.4540 resistance now seems to cap any further near-term up-move for the pair.
On the flip side, 50-day SMA near 1.4400 handle might continue to protect immediate downside. Weakness below this immediate support seems to get extended till 100-day SMA support near 1.4350 region, which if broken decisively would increase the pair's vulnerability to continue drifting lower in the near-term.