GBP/USD hits fresh two-month highs after UK services PMI

The GBP/USD pair extended its recovery move further beyond 1.2700 handle and touched a fresh two-month peak after upbeat UK services CPI.

Currently trading around 1.2735-40 band, the pair caught fresh bids after surprisingly stronger-than-expected gauge measuring activity in the UK services sector. In fact, the Markit services PMI unexpectedly rose to 55.2 for November from October’s 54.5 and the reading was better-than 54.2 expected.

Today’s better-than-expected services PMI print added on to Friday’s upbeat construction PMI and helped the pair to erase early losses led by a ‘NO’ vote to Italian Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday and build on to its recent recovery trend to the highest level since Oct. 6.

Later during NA session, the US ISM non-manufacturing PMI will be in spotlight and provide further opportunities for short-term traders.

Technical levels to watch

A follow through buying interest above 1.2700 handle is likely to lift the pair immediately towards a two-month high resistance near 1.2735-40 touched on Friday before the pair makes an attempt towards testing 100-day SMA resistance near 1.2800 handle. On the downside, 1.2665 level now becomes immediate support to defend, which if broken seems to drag the pair back towards session low support near 1.2625 en-route 1.2600 round figure mark support.