GBP/USD reaches out for 1.2100 as Dollar trips again ahead of US PMI

• GBP/USD jumps back toward 1.2100 amid risk recovery.
• US Dollar rebound fizzles out, USD/JPY sell-off weighs.
• GBP/USD bounces off 200DM, RSI enters into the bullish zone.

GBP/USD is holding onto the latest upswing toward 1.2100, as bulls jump back into the game amid holiday-thinned market conditions.

The main catalyst behind the pair’s renewed upside is the fresh round of selling seen in the US Dollar across the board. As the broad market sentiment is improving, the safe-haven US Dollar is fading its recovery attempts amid a subdued performance in the US Treasury bond yields. Upbeat Chinese Caixin Manufacturing is helping lift the overall market mood, with the US S&P 500 futures wiping out entire losses.

The fresh move lower in the US Dollar is also driven by the USD/JPY sell-off, as the Japanese yen rallies hard on speculations that the Bank of Japan (BoJ) is on course to exit from its ultra-loose easy monetary, as the year 2023 kicks in. In absence of any high-impact data from both sides of the Atlantic, risk trends and the US Dollar price action will continue, although the US S&P Global Manufacturing PMI could offer some trading incentives to Cable.

From a short-term technical perspective, the GBP/USD pair is extending its range play below the 21 and 200-Daily Moving Averages (DMA) for the third straight trading day.

GBP bulls continue defending the 200DMA at 1.2036, looking to take out the daily highs at 1.2085 in a bid to recapture the 1.2100 round figure.

The 14-day Relative Strength Index (RSI) is heading higher above the midline, justifying the renewed uptick.

GBP/USD: Daily chart

On the downside, Cable needs a sustained move above the 200DMA before challenging the 1.2000 barrier.

A breach of the latter could trigger a fresh sell-off toward the bullish 50DMA at 1.1933.

GBP/USD: Additional technical levels