GBP/USD looks to regain traction, flirting with 1.2500

The Sterling is marginally stronger vs. the greenback at the end of the Asian session, with GBP/USD in a consolidative theme below the 1.2500 handle.

GBP/USD upside capped above 1.2700

The pair is looking to stabilize following two consecutive pullbacks after being rejected from recent tops above the 1.2700 handle.

In fact, Cable’s rally found strong resistance above 1.2700 the figure after the Bank of England showed no rush to hike rates at its meeting and Quarterly Inflation Report last Thursday.

In addition, Governor M.Carney stressed once again that rates could go in either direction, depending on the future developments in the UK economy, removing further legs to the up move.

That, plus the pick up in the demand for the US dollar has added to the decline from 2-month tops at 1.2715 seen on Thursday.

On the positioning front, GBP speculative net shorts have retreated to 5-week lows in the week to January 31, as showed by the latest CFTC report, somewhat limiting the downside.

GBP/USD levels to consider

As of writing the pair is gaining 0.06% at 1.2492 facing the next resistance at 1.2538 (high Feb.3) followed by 1.2680 (high Feb.2) and then 1.2715 (high Feb.2). On the flip side, a breakdown of 1.2461 (100-day sma) would open the door to 1.2456 (low Feb.3) and finally 1.2412 (20-day sma).