GBP/USD steady above 1.2550 remains close to 1.2645 multi-month highs
|- GBP/USD reversal from 1.2610 has been contained above 1.2550.
- Pound appreciates amid a positive market sentiment, with the dollar pulling down.
- FXStreet analysts see the current GBP rally capped at 1.2645 double-top.
Sterling’s reversal from 5-week highs at 1.2610 has been contained at 1.2550 and the pair remains steady, with the 2, ½-month highs, at 1.2645 on sight. The cable is on its way to a 2.6% appreciation following a five-day rally, buoyed by a risk-on market that is weighing on the US dollar.
US dollar drops amid global recovery hopes
The GBP/USD continues advancing on a solid pace as the US dollar loses ground against its main peers. The recent measures to re-open of the major economies are boosting confidence on global recovery in the second half of the year, a sentiment that has been driving investors towards riskier assets.
Furthermore, US macroeconomic data, with ADP employment figures showing a substantial decline on employment loss in May and the better than expected ISM non-manufacturing activity have contributed to keeping the positive sentiment, in detriment of safe-havens like the US dollar.
Pound bulls, however, remain weighed by looming Brexit risks. With the trade negotiations at a deadlock, the Bank of England has warned the City to prepare for a no-deal exit from the Union, which is offsetting pound strength.
GBP/USD: resistance at 1.2645 will cap pound’s rally – Yohay Elam
FXStreet’s analyst Yohay Elam observes the pound entering overbought territory, unlikely to advance beyond the 1.2645 level: “The Relative Strength Index on the 4-hour chart is above 70, pointing to overbought conditions and potential downfall. Cable has been approaching the critical 1.2645 level, a double top recorded in April. Reaching it and crossing it seems unlikely in the short-term.”
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