GBP/USD extends into a two-day win streak as Pound recovers

• GBP/USD caught a bid on Monday, rising 0.7%.
• PMI figures came in softer on both sides of the Atlantic.
• Easing Greenback flows gave Cable a chance to catch its breath.
• GBP/USD extended into its second day of gains in a row, kicking off the new trading week gaining seven-tenths of one percent and dragging bids back above the 1.2500 handle after last week's bearish plunge below 1.2400. Purchasing Managers Index (PMI) figures missed the mark on both the UK and US sides. However, a general milieu of rising risk appetite kept safe-haven flows into the Greenback at bay.

UK PMI figures for December entirely missed the mark, printing below Wall Street forecasts and falling back but remaining above the 50.0 watermark for contraction expectations. The Composite PMI in particular fell to a 13-month low, easing to 50.4 from the expected hold at 50.5.

Final US S&P Global PMI figures somewhat missed the mark on Monday, with the Composite and Services PMIs for December both climbing from one month to the next, albeit less than analysts expected. Both indicators saw a slight downward revision from their preliminary prints, but still gained ground as the US economy churns on.

The key print for the midweek window will be Tuesday's US ISM Services PMI for December. Median market forecasts are expecting an upswing to 53.0 from the previous month's 52.1. Friday's Nonfarm Payrolls (NFP) print will cast a long shadow over markets this week as investors anticipate a goldilocks print that will help push the Federal Reserve (Fed) toward more rate cuts, but not too weak or strong toward either side.

GBP/USD price forecast

GBP/USD has eased into a two-day rally, a welcome technical turn after the pair plunged to fresh nine-month lows last week below the 1.2400 handle. While selling pressure still has eyes set on the major 1.2000 price level, an exhaustion play could be on the cards as buyers try to muscle price action back up to the 50-day Exponential Moving Average (EMA) falling through the 1.2700 handle.

GBP/USD daily chart