GBP/USD sharp recovery move from 6-week lows stalls near mid-1.2800s

Having staged a sharp recovery from six week lows, the GBP/USD pair now seems to have entered a consolidation phase just below mid-1.2800s.

Despite of a slight disappointment from today's UK economic releases - net lending to individuals and mortgage approvals, the pair bounced off sharply from lower levels and surged through the 1.2800 handle amid month-end flows. 

Moreover, a sharp retracement in the US treasury bond yields failed to lend any support to the US Dollar's early up-move and further collaborated to the pair's sudden turnaround from the lowest level since April 21.

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The recovery, however, seems to have stalled near mid-1.2800s as investors remained concerned over political uncertainty stemming out of the upcoming UK general election on June 8. The latest poll results indicated that May's Conservative Party could lose its majority and added worries over a possible 'hard Brexit' scenario. Hence, it would be prudent to wait for a follow through action before committing to the pair's next leg of directional move. 

Next on tap would be the US economic docket, featuring the release of Chicago PMI and Pending Home Sales data, which would be looked upon to grab some short-term trading opportunists ahead of a slew of important macro data scheduled for release at the start of a new month.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "technical readings support additional declines, with the price contained by a bearish 20 SMA, now offering a dynamic resistance in the 1.2820 region, whilst technical indicators accelerated north, and particularly the RSI stands at 33, anticipating additional declines."

"The immediate support comes at 1.2756, the lowest ever since PM May announced the General election, with a break below it exposing the 1.2720 price zone. A recovery beyond 1.2820 on the other hand can see the pair recovering up to 1.2860, but selling interest will likely contain the advance and a trigger a retracement" she added.