GBP/USD: Recovery stalled near 1.2960, what next?

The bulls take a breather in the Asian session, keeping the overnight recovery in GBP/USD  capped near 1.2960 levels, despite risk-on market profile

GBP/USD: Focus shifts to BOE

The spot is seen flirting with the mid-point of 1.29 handle, as the bulls await fresh impetus for the next push higher. The pound manages to keep the bid tone intact so far this session, as broad based US dollar correction amid a retreat in the US yields keeps the GBP/USD pair underpinned.

Moreover, with higher stocks and oil prices, appetite for risk assets resurfaced in Asia, boosting demand for the risk currency GBP. However, further upside lacks follow-through as investors turn on the side-lines and refrain from placing directional bets ahead of the BOE monetary policy decision and quarterly inflation report (QIR) release due tomorrow.

Meanwhile, the US dollar rallied hard against its main competitors yesterday, on the back of increasing odds for a June Fed rate hike and hawkish comments from the Fed official Rosengren and George.

Calendar-wise, the UK docket remains data-empty and hence, attention turn towards the US second-tier data in the import prices and Fedspeak due later in the NA session.

GBP/USD Levels to consider            

A break above 1.2954/57 (5-DMA/ daily high) could lift the pair above 1.2990 (7-week high), beyond which a test of 1.3025 (classic R3) is imminent. Conversely, a break below 1.2932 (daily low/ 10-DMA), leading to a subsequent break below 1.2900 (round figure) is likely to drag the pair towards testing its next support near 1.2886 (20-DMA).