GBP/USD preserves daily gains above 1.24 handle

Despite a pullback from the daily high at 1.2430, the GBP/USD pair continues to hold on to its daily gains above the 1.24 mark. At the moment, the pair is up 0.4% at 1.2415.

The US Dollar Index seems to have found a short-term support at 100.90 after losing 0.3 points from 101.20 in the first couple of hours of the American session making it difficult for the pair to extend its rise. Furthermore, the major stock indexes in the United States have slipped back in the negative territory as the crude oil started to erase its daily gains, hurting the risk sentiment that usually helps the cable.

There were no macro data from the UK today but tomorrow's docket will offer the CPI and PPI. The consumer inflation in the UK has risen above the 2% mark for the first time in more than three years in February amid the weakening GBP since the Brexit. BoE officials have been voicing their concerns over the rising inflation, and a higher reading could provide the pair with some fresh upside momentum as the markets could start expecting a tighter monetary policy from the BoE.

Later during the session, Fed Chair Yellen will be crossing the wires as she gives her remarks on the monetary policy at the University of Michigan.Volatility could pick up during her speech if she touches on the issue of trimming the balance sheet.

Technical outlook

The GBP/USD faces the first resistance at 1.2460 (20-DMA) before 1.25 (psychological level) and 1.2560 (Mar. 31 high). To the downside, supports are aligned at 1.2400 (psychological level), 1.2360 (Fib. 50% of Dec/Jan fall) and 1.2270 (Fib. 38.2% of Dec/Jan fall).

• GBP/USD further pullbacks likely – UOB