GBP/USD surges to 1.36 handle ahead of US PPI

   •  A modest USD retracement prompts some aggressive short-covering bounce.
   •  Further gains are likely to remain limited ahead of BoE Super Thursday.

The GBP/USD pair quickly reversed an early dip to the key 1.3500 psychological mark and has now moved past yesterday's swing highs.

The pair has been finding decent buying interest at lower levels and is now building on its move back above the very important 200-day SMA, with bulls now eyeing a decisive move beyond the 1.3600 handle for further recovery. 

Despite a strong pickup in the US Treasury bond yields, the US Dollar Index failed to preserve early strong gains to fresh YTD tops and was seen as one of the key factors behind the pair's intraday sharp rebound of over 90-pips.

It would now be interesting to see if the pair is able to continue with it recovery trend or the up-move is once again sold into as investors start repositioning for the next big event risk - the BoE Super Thursday.

In the meantime, traders are likely to take cues from the release of US Producer Price Index (PPI) for April, which might influence the USD price dynamics during the early NA session.

Technical levels to watch

A follow-through up-move beyond the 1.3600 mark could get extended but seems more likely to be capped an important support break-point, now turned resistance, near the 1.3645 region. On the flip side, the 1.3500 handle, closely followed by the 1.3485 area might continue to protect the immediate downside, which if broken now seems to pave the way for an extension of the pair's near-term bearish trajectory.