GBP/USD off lows, back closer to 1.29 handle after US housing data

Having faded UK inflation figures-led bullish spike, the GBP/USD pair reversed sharply and retreated around 100-pips from session high level of 1.2957. The pair, however, has managed to recover some pips and is currently trading around 1.2880-85 region following the release of US housing data.

Data released from the US showed building permits contracted by 2.5% during April, with the annualized pace dropping to 1.229 million units as compared to 1.27 million expected and previous month’s 1.26 million. Meanwhile, housing starts also eased to an annual rate of 1.172 million units, down from previous 1.203 million and worse than 1.260 million expected. 

Today's downbeat housing data added to the recent slew of dismal US macro releases and did little to provide any immediate respite for the greenback bulls, with the key US Dollar Index hitting fresh multi-month lows and sliding closer to the 98.00 handle.

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Today’s US economic docket also features the release of industrial production and capacity utilization data, due in a short-while from now. 

Earlier during the day, the pair failed to build on upbeat UK inflation data-led up-move to 4-day tops, despite of the prevalent strong bearish sentiment surrounding the greenback, as investors seemed already prepared for an up-tick, given that the Bank of England had raised its projection for inflation in Q1 to 2.7%.

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Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "the 4 hours char shows a modest bullish stance, although with the price within its previous weeks' range. The 20 SMA in the mentioned chart heads slightly lower below the current level, currently around 1.2900, while indicators have once again entered positive territory, but without enough momentum to confirm a bullish breakout. The pair has an immediate short term resistance at 1.2960, followed by strong selling interest aligned around 1.3000. A break above this last should lead to an advance up to 1.3060, leaving doors open for a steeper recovery. Below 1.2900, the next supports come at 1.2865, and 1.2830, with limited chances on a break below this last."