GBP/USD sticks to gains near one-week tops, eyeing to reclaim 1

GBP/USD sticks to gains near one-week tops, eyeing to reclaim 1.3300 mark

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  • GBP/USD continued scaling higher for the fourth consecutive session on Wednesday.
  • The British pound was underpinned by hopes for a possible last-minute Brexit deal.
  • COVID-19 jitters weighed on the USD and remained supportive of the positive move.

The GBP/USD pair climbed to fresh one-week tops during the early European session, with bulls now eyeing a move towards reclaiming the 1.3300 round-figure mark.

A combination of supporting factors assisted the pair to build on last week’s rebound from the vicinity of the 1.3100 mark and gain traction for the fourth consecutive session. Concerns about the potential economic fallout from new COVID-19 restrictions in several US states tempered the latest optimism around promising vaccine trails. This, along with the ongoing slide in the US Treasury bond yields kept the US dollar bulls on the defensive through the first half of the trading action on Thursday.

On the other hand, the British pound remained well supported by hopes that Britain and the European Union could reach a Brexit divorce agreement by the beginning of next week. Adding to this, Wednesday’s mostly upbeat UK consumer inflation figures provided an additional boost to the GBP/USD pair and remained supportive. However, the fact that negotiators are yet to find a compromise on key sticking points, including fisheries, held the GBP bulls from placing aggressive bets and might cap the upside.

It is worth reporting that EU negotiators are reportedly due to update envoys of the bloc’s 27 member states on the latest in trade talks with Britain at 0700 GMT on Friday. This makes it prudent to wait for some strong follow-through buying, possibly beyond the 1.3310-15 region, before positioning for an extension of the recent bullish trajectory.

Market participants now look forward to the US economic docket – featuring the releases of Building Permits and Housing Starts – for a fresh impetus later during the early North American session. The data, along with developments surrounding the coronavirus saga and the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair.

Technical levels to watch

Credit: FX Street

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