GBP/USD Forecast: Bulls likely to target 1.2600 as focus shifts to Brexit talks in London

The GBP/USD pair reversed an intraday dip to the 1.2440-35 region and ended the day with modest gains on the last trading day of the week. The pair extended the previous day's intraday retracement slide from weekly tops and remained on the defensive amid doubts about the possibility of reaching an agreement before the end of the transition period in December 2020, especially after the UK and EU delayed a meeting scheduled on Friday due to the divergences between the two parties. On the economic data front, the UK Services PMI was revised higher to 47.1 from the preliminary reading of 47, albeit failed to impress bullish traders.

However,  growing optimism about a sharp V-shaped global economic recovery continued undermining the US dollar's safe-haven status and helped limit any deeper losses, rather assisted the pair to attract some dip-buying. The pair bounced around 50 pips from daily lows and the uptick remained unaffected by concerns over a continuous surge in coronavirus cases. the upbeat market mood remained supportive of the uptick through the Asian session on Monday. Bulls now seemed to make a fresh attempt to build on the momentum beyond the key 1.2500 psychological mark as the focus now shifts to another round of the key Brexit talks in London.

The incoming Brexit-related headlines will play a key role in influencing the sentiment surrounding the British pound and infuse some volatility. Later during the early North American session, traders will look forward to the US economic docket – highlighting the release of the ISM Non-Manufacturing PMI – might further contribute towards producing some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, nothing has changed much for the pair and the near-term bias still seems tilted in favour of bullish traders. Hence, a move back towards retesting last week’s swing high, around the 1.2530-35 region, remains a distinct possibility. The mentioned level marks with the 50% Fibonacci level of the 1.2813-1.2252 corrective slide, above which the pair seems all set to aim towards testing the 61.8% Fibo. level, around the 1.2600 round-figure mark.

On the flip side, the 38.2% Fibo. level, near the 1.2465 region, now seems to protect the immediate downside, which if broken decisively might turn the pair vulnerable to accelerate the fall back towards retesting sub-1.2400 level. The latter coincides with the 23.6% Fibo. level, below which the slide could further get extended towards the 1.2350-40 horizontal support.