The U.S. dollar gave up pips against “riskier” counterparts like the British pound following a U.S. data release.

Will the momentum help extend GBP/USD’s months-long uptrend?

We’re taking a closer look at the 4-hour chart:

GBP/USD 4-hour Forex Chart by TradingView

In case you missed it, the pullback in the weekly U.S. initial jobless claims released yesterday helped calm investors who were shouting “RECESSION!” in the streets.

A sign that we may see an economic “cooldown” rather than a “recession” helped bump up risk-related currencies like the British pound higher against the U.S. dollar.

Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. dollar and the British pound, then it’s time to check out the economic calendar and stay updated on daily fundamental news

GBP/USD, which was consolidating near the 1.2700 psychological handle, saw an upside breakout that took it to its current 1.2750 levels.

Are we looking at the beginning of a trend extension?

A few more bullish candlesticks could take GBP/USD to the 1.2800 Pivot Point levels or the 1.2850 mid-channel resistance area.

If the upswing is supported by fundamental catalysts, we may even see GBP/USD retest previous areas of interest like the R1 (1.2890) Pivot Point level or the big 1.3000 psychological handle.

On the other hand, a bearish turn could keep GBP/USD near its multi-week lows. Look out for bearish candlesticks that may take Cable back to the 1.2700 support.

If GBP/USD dipping lower leads to sustained trading below 1.2700, GBP/USD could see a bearish trend breakout that may drag the pair to the S2 (1.2617) Pivot Point line and potential inflection point.