GBP/USD retreats back to 1.2250 ahead of US data

The GBP/USD pair ran through some offers at higher levels and trimmed some of its strong gains to 1.2275, albeit has managed to hold above mid-1.2200s.

The greenback regained traction at lower levels, with the overall US Dollar Index paring early losses and heading back towards 103.00 mark, and seems to be the only factor hindering the pair's recovery move from two-month lows near 1.2200 handle touched yesterday. 

Market seems to have digested yesterday's disappointing home sales data from the US and continued optimism over faster US economic growth and higher inflation came to the rescue for the US Dollar bulls. 

Next on tap would be initial weekly jobless claims and goods trade balance data from the US, which might provide some impetus for short-term traders.

Technical levels to watch

Immediate support is pegged near 1.2225-20 area below which the pair seems more likely to break below 1.2200 handle and accelerate the slide towards 1.2160 support area. On the upside, 1.2275 level now seems to have emerged as immediate resistance, which if cleared has the potential to lift the pair beyond 1.2300 handle towards testing its next major hurdle near 1.2325-30 horizontal zone.