GBP/USD maintains bullish bias above 1.2300 handle

The greenback lost some ground on Thursday, with the GBP/USD pair building on to its move back above 1.2300 handle.

Currently trading around 1.2320 region, the pair gained some traction on soothing comments from Germany's Finance Minister Wolfgang Schaeuble, at the World Economic Forum in Davos, that Germany will do best to make relationship between EU and Britain as close as possible. 

Meanwhile, the US Dollar was subject to profit-taking in today's trade, following Wednesday's strong recovery in reaction to the Fed Chair Janet Yellen's hawkish speech, further collaborated to the pair's bid tone on Thursday.

The pair, however, quickly reversing around 20-pips from session peak level of 1.2340 touched in the past hour as investors remained cautious ahead of ECB monetary policy decision and Yellen speech later during NY trading session. Moreover, traders would also be reluctant to carry big bets ahead of President-elect Donald Trump’s inauguration on Friday, which might eventually lead to a yet another volatile session in the FX market. 

Today's US economic releases might be overshadowed by ECB-led volatility in the FX market but might still provide some short-term trading opportunities.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "Now trading below the critical 1.2330 price zone, the 4 hours chart shows that the price is well above a bullish 20 SMA, while technical indicators maintain their bullish slopes well into positive territory. 

"Beyond the mentioned resistance, the rally can extend up to 1.2370, whilst beyond this last, the weekly high of 1.2415 level comes next. Gains beyond this last are possible, but unlikely to hold, as selling at higher levels is still the way to play the Pound."

"Supports today are at 1.2290 and the daily low at 1.2250, with a break below this last exposing the 1.2200 figure."