GBP/USD consolidates gains and continues to test 1.2700

• Pound holds to gains and near the 1.2700 zone, up for the week. 
• Cable rebounded earlier on the back of UK Hunt’s comments. 

The rebound of GBP/USD from 1.2630 found resistance below the 1.2700 area. It failed to break higher and pulled back modestly. As of writing trades at 1.2695, consolidating daily gains and testing 1.2700. A break higher could open the doors to further gains and a test of the weekly high at 1.2735. 

In the short-term, the positive tone is likely to prevail as long as GBP/USD remains above 1.2665/70, below that level the next support is seen at 1.2635. A break lower would expose 1.2600. Volatility remains limited ahead of the weekend, so not much price action is expected. 

Earlier today, UK Foreign Minister Jeremy Hunt, mentioned that the UK PM May’s Brexit deal could pass the parliament if the European Union offers clarification that the Irish “backstop” will be time-limited. Still, uncertainty about Brexit prevails, and it is likely to limit strong gains. 

In the US, major equity indexes are modestly higher, sustaining the rebound of the previous two sessions. Regarding data, the Chicago PMI dropped in December but less-than-expected while housing data came in line with expectations.