GBP/USD clings to gains near session tops, around 1.2920-25 region post-UK PMIs

• GBP/USD stages a goodish rebound from three-month lows set on Thursday.
• A modest USD pullback from multi-year tops remained supportive of the move.
• Mixed UK flash Manufacturing/Services PMI did little to provide any fresh impetus.

The GBP/USD pair maintained its bid tone near session tops – around the 1.2920-25 region – and had a rather muted reaction to the mixed UK macro data.

The pair managed to gain some positive traction on the last trading day of the week and built on the previous session’s intraday bounce from near three-month lows amid a modest US dollar pullback from multi-year tops.

GBP/USD supported by retreating USD

Fears surrounding the outbreak of coronavirus beyond China triggered a fresh wave of the global risk-aversion trade and led to a sharp downfall in the US Treasury bond yields, which prompted some USD profit-taking.

Apart from the USD weakness, the uptick was further supported by stronger UK flash Manufacturing PMI, which remained in the expansion territory and came in at 51.9 for February vs. a dip to 49.7 expected.

The positive reading, to some extent, was offset by a slight disappointment from the UK flash Services PMI, which edged lower to 53.3 during the reported month as compared to 53.4 anticipated and 53.9 previous.

It, however, remains to be seen if the pair is able to capitalize on the recovery or meets with some fresh supply amid persistent fears that Britain might crash out of the European Union at the end of the transition period.

Technical levels to watch