GBP/USD refreshes session tops near 1.3380 region, eyeing overnight swing highs
- A combination of factors assisted GBP/USD to regain some positive traction on Tuesday.
- Dovish Fed expectations, COVID-19 vaccine optimism undermined the safe-haven USD.
- The British pound remained well supported by hopes for a last-minute Brexit trade deal.
The USD selling bias picked up pace during the early European session and pushed the GBP/USD pair to daily tops, around the 1.3375-80 region in the last hour.
Following the previous day’s intraday pullback of around 65-70 pips, the pair managed to regain traction on Tuesday and was being supported by a combination of factors. As investors looked past Monday’s upbeat US PMI prints, speculations for additional monetary policy easing by the Fed prompted some fresh selling around the US dollar. This, in turn, was seen as one of the key factors driving the GBP/USD pair higher.
On the other hand, the British pound remained well supported by hopes for a last-minute Brexit deal, despite the lack of progress on three sticking points – the so-called level playing field, fisheries and state-aid rules. It is worth recalling that the EU’s chief Brexit negotiator Michel Barnier said on Monday that fundamental differences remain in the trade talks with the UK.
From a technical perspective, the emergence of some dip-buying on Tuesday favours bullish trades and supports prospects for a further near-term appreciating move for the GBP/USD pair. That said, traders might still wait for a sustained break through a resistance marked the top end of a two-month-old ascending channel, around the 1.3400 mark, before placing fresh bullish bets.
There isn’t any major market-moving economic data due for release from the UK. Meanwhile, the US economic docket features the releases of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index. This, along with the incoming Brexit-related headlines, should produce some meaningful trading opportunities around the GBP/USD pair.
Technical levels to watch