GBP/USD suppressed near multi-week lows after US trade balance

The GBP/USD pair stalled its recovery move near 1.2385 level and is now headed back to the lower end of daily trading range after US trade balance data. 

Currently trading around 1.2360-65 region, the pair ran through some fresh offers and moved closer to session lows (touched during mid-European session) after US trade balance for December came-in to show a deficit of $44.3 billion, down from previous month's $45.7 billion and slightly better-than $45.0 billion deficit expected. 

The data did little to hinder the ongoing greenback recovery, with the key US Dollar Index holding on to its gains near mid-100.00s, and provide any immediate respite for the GBP bulls. 

Meanwhile, the British Pound remained undermined by poor UK data (Halifax HPI) and the BRC January survey, highlighting a -0.6% m/m drop in like-for-like sales, against the backdrop of last week's dovish comments from BoE. Moreover, investors also seemed reluctant to carry/initiate any bullish GBP bets ahead of Wednesday's House of Commons vote on the Brexit legislation, keeping the pair suppressed closer to three-week lows near mid-1.2300s. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "The pair is sharply bearish and poised to break lower, as technical indicators head south almost vertically, with the RSI indicator now around 25, and the price far below a bearish 20 SMA and below the 200 EMA for the first time since Jan. 20."

"The pair has a major static support around 1.2330, and a downward acceleration below it could see the GBP/USD falling down to 1.2260, the 61.8% retracement of the mentioned rally. To the upside, the immediate resistance comes at 1.2385, followed by 1.2430. It would take a recovery above this last, quite unlikely at the time being, to see the pair recovering up to 1.2460/80."