Having posted a session low at 1.2168, the GBP/USD pair managed to recover major part of its lost ground and is now holding comfortably above 1.2200 handle.
Currently trading with only marginal loss around 1.2240-45 region, after BOE Governor Mark Carney and Deputy Governor Nemat Shafik commented on the benefits of additional stimulus announced by BOE in August. The recovery, however, lacked momentum amid lack of follow through buying interest after BOE's quarterly report on credit conditions revealed that Brexit uncertainty has dented demand for UK mortgages. Adding to this, disappointing UK construction output data further soured sentiment around the British Pound.
Next in focus would be the release of US macro data that includes – monthly retail sales, PPI and Prelim UoM Consumer Sentiment, and speech from the Fed Chair Janet Yellen, which would trigger the next leg of move for the major during NY trading session.
Technical levels to watch
A follow through buying interest above 1.2260 resistance now seems to lift the pair immediately towards 1.2300 handle above which the pair seems all set to reclaim 1.2400 and head towards its next major resistance near 1.2425 level.
On the flip side, weakness back below 1.2200 handle now seems to find immediate support near 1.2160 level, which if broken is likely to drag the pair back towards 1.2100 round figure mark.