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 The GBP/USD managed to make back its losses from the day before and some. It was boosted by stronger-than-expected PMI data, which helped to push rates well north of the 1.25 handle to reach its highest level since early September. The dollar had also fallen against other major currencies, suggesting that the “peak interest rates” narrative is still the dominant theme out there. But with the Thanksgiving holiday, the gains could be capped until at least Friday when US investors come back to the fray. Nevertheless, the path of least resistance remains to the upside for now, especially with the cable now moving, and staying, above its 200-day average. 
 UK services back in growth territory In case you missed it, the UK’s services sector unexpectedly rose back above the expansion threshold of 50.0 in November, according to surveyed purchasing managers in the industry. The official S&P Global services PMI came in at 50.5 vs. 49.5 expected and last. The manufacturing sector remained in contraction (46.7), albeit at a less worrying pace than the month before (44.8) and better than expected (45.0). The data helped to lift the pound across the board, sending the GBP/USD to a new high on the week of above 1.2560.Thursday’s recovery in the cable comes after a drop in the previous session, which was driven in part because of the disappointment in the budget announcement and a general rebound in the US dollar.  With regards to the autumn statement, the pound’s reaction was actually quite minimal. The tax cuts and spendings that were announced could, on the one hand, help to boost output but, on the other hand, may also increase inflationary pressures at the same time. These offsetting factors left pound traders scratching their heads. With the dollar also staging a recovery against other FX pairs on Wednesday on the back of mixed data and the fact that the EUR/GBP barely moved, means that the impact of the budget was indeed minimal on FX markets.
 No Turkey for US dollar bulls: Greenback fades after Wednesday’s recovery In recent weeks, the cable has been on the rise, primarily driven by a weaker US dollar amid hopes we have passed the peak interest rates there. The US dollar was back down against all major currencies in the first half of Thursday’s session, giving back most, if not all, of its gains made in the previous session.With the US out celebrating Thanksgiving, don’t expect any big moves during the US session. The key data release on the economic calendar on Friday will be US PMI data from the services and manufacturing sectors. In October, US PMIs rose back above the expansion threshold of 50.0, if only just. We have seen resilience in other US data, too, while inflation has started to fall more rapidly. So far, it looks like the US may avoid a recession despite high interest rates. But let’s see if the resilience of the world’s largest economy will continue, or high interest rates will take a toll on it. The flash PMI data will give us a snapshot of the health of the US economy on the final day of the week. But with many US investors expected to be on holiday, volatility might be on the thin side.On Wednesday, we saw a drop in US unemployment claims to 209K from 233K previously, which was noticeably more than expected, suggesting that the jobs market is not cooling as fast as some had hoped. What’s more, 1-year inflation expectations rose further (to 4.5%) while consumer sentiment improved more than expected (to 61.3 from 60.4), according to revised figures from the closely watched University of Michigan’s surveys. This helped to support the dollar on the day, with the view that it will discourage the Fed from cutting rates sooner, all else being equal. Still, with a couple of other US macro pointers coming in weaker of late, it will take a lot more than just a couple of better-than-expected data releases to change the ongoing narrative that the Fed is done with rate hikes and that the next move would be a rate cut.Hence, the dollar was unable to rally significantly, before resuming lower on Thursday. So, the GBP/USD should continue to find support on any short-term weakness until something fundamentally changes.
 GBP/USD technical analysisThe higher lows we have observed in the GBPUSD since it bottomed in early October means the path of least resistance remains to the upside for now. The key support area that needs to hold now is around 1.2450 to 1.2500. This area was previously resistance but this week we have seen a break above it, and Wednesday’s retest of this area from above held. The 200-day average also comes into play around 1.2450, making it even more important from a technical point of view. This means that, as things stand, the bears will need to see a decisive break below here before potentially entering the fray. On the upside, 1.2590 looks like an interesting level given that it was the base of the last significant rally in the summer before the cable topped out. Here, the 50% retracement level of the entire drop from July also comes into play. Source: TradingView.comMore By This Author:EUR/USD: Currency Pair Of The Week – Monday, Nov. 20FTSE Lags EU And US Markets, But Time For Catch Up With Global Indices? GBP/USD: Currency Pair Of The Week – Monday, Nov. 13