The UK PMI data certainly surprised with more upbeat readings in both the manufacturing and services sector. That essentially is squashing the whole recession narrative in Q1 with businesses growing more optimistic about inflation peaking in the UK. The pound has jumped higher as a result, moving up from 1.2000 to 1.2070 and running into a test of its 200-hour moving average (blue line).

On the balance of things, I would say that the data doesn't change much of the outlook for the BOE. They are going to be moving in 25 bps increments next and even if conditions might improve slightly for now, further policy tightening and inflation stickiness is likely to keep weighing on economic prospects down the road.

If anything, I still find it hard to turn the other cheek when it comes to viewing the pound and the UK economy at the moment. As such, any rally that is looking to build on this data alone should be faded in my view.

For now though, the 200-hour moving average at 1.2069 will be the first key near-term test. A break above that will put buyers in near-term control with the 14 February high at 1.2270 offering some added resistance next.

In the bigger picture, the pair is still seeing any upside momentum capped by the December highs at 1.2443-46 with downside limited by support around its key daily moving averages at 1.1913-34 currently.