GBP/USD takes a breather after over 200-pips sharp spike to 1.2350 area

The GBP/USD pair was seen building on to its strong recovery move and has now reclaimed control over 1.2300 handle.

A strong short-covering rally around British Pound, following UK PM Theresa May's much awaited speech on Brexit, helped the pair to recover over 300-pips from Monday's post flash-crash drop below 1.20 psychological mark. May's comments that the final Brexit plan would be put forward for a vote in both Houses of the Parliament surprised market participants and forced traders to cover their bearish bets, initiated in anticipation of comments on "hard Brexit”. 

As the dust settled, bulls took a breather following a sharp rally to seven-day rally amid mild greenback bounce from lows, as measured by the key US Dollar Index. The pair has now retreated few pips from session peak and is currently trading around 1.2320-25 region. 

Next in focus would be US economic docket featuring the release of Empire state manufacturing index and Fedspeaks, which would be looked upon for some additional respite for the US Dollar bulls. 

Technical levels to watch

1.2350 level now seems to have emerged as immediate resistance, which if cleared seems to lift the pair towards 1.2375 intermediate resistance, en-route 1.2400 handle and 1.2430 strong horizontal resistance (Jan. 5-6 highs). 

On the flip side, 1.2275-70 area seems to protect immediate downside, which if broken is likely to drag the pair back towards 1.2215-10 support area.