The GBP/USD pair has managed to bounce off few pips from multi-week lows, but maintained its bearish bias near mid-1.2100s. 

A modest retracement in the US treasury bond yields seems to have prompted some profit taking off long-dollar positions and collaborated to the pair's rebound from session low. The incoming US economic data, with the latest read on the US labor market (ADP report) surpassing the most optimistic estimates, have been supportive for an eventual Fed rate-hike action at its meeting next week and continues to underpin the US Dollar demand. Persistent greenback buying interst should now limit any meaningful near-term recovery for the major. 

The bearish tone around the pair, however, remained unchanged so far this week amid renewed Brexit uncertainty. Market worries were further aggravate after the UK PM Theresa May faced another implementation setback on Tuesday when the House of Lords  approved a plan calling for a "meaningful" parliamentary vote on the final terms of withdrawal from the European bloc. 

Investors’ attention on Thursday would remain glued to the key ECB monetary policy decision, which is expected to trigger a bout of volatility in the FX market and the spillover effect might provide some impetus for the major. Later during the NA session, weekly jobless claims data from the US would also be looked upon for short-term trading opportunities.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, “the pair is set to extend its decline, given that in the 4 hours chart, the 20 SMA maintains a sharp bearish slope above the current level, while the Momentum indicator has turned back south within bearish territory and the RSI indicator heads south around 29. Furthermore, the pair has accelerated its slide below the 61.8% retracement of the January rally at 1.2260, and would take a recovery above it to see the bearish pressure easing, something quite unlikely at this point.”

“The immediate support stands at 1.2120, with a break below it indicating a downward extension towards 1.2070/80, followed later by 1.2040. The upside is being contained by selling interest around 1.2190, with a recovery above it seeing resistances at 1.2220 and 1.2260.”