After yesterday's brief pause, the GBP/USD pair regained traction and moved back above the 1.2800 handle, reversing majority of its previous session's corrective slide. Today's up-move could be attributed to a fresh bout of US Dollar selling interest emerging amid ongoing geopolitical tensions. Meanwhile, sentiment surrounding the British Pound seems to have turned positive following Tuesday's announcement by the UK PM Theresa May to call for a snap election on June 8. An early UK election has been seen as a positive development towards strengthening May's position during the Brexit negotiations, supporting 'soft Brexit' scenario.
Meanwhile, the UK Parliament voted 522-13 - well above the two-third majority required under British law, in favor of an early election and hence, the incoming poll results should continue to fuel volatility across the GBP cross.
There are no macroeconomic releases due from the UK today and hence, investors’ focus on Thursday will remain glued to BOE Governor Mark Carney’s speeches during the NY trading session. Market participants will also focus on the US Treasury Secretary Steven Mnuchin’s speech, where remarks over the US currency should infuse additional volatility in the major.
From technical perspective, the pair is rebounding from its immediate support near 1.2775-70 region, marking 23.6% Fibonacci retracement level of 1.2365-1.2905 latest up-move and with short-term indicators cooling off from near-term overbought positions, the pair seems more likely to build on to early gains.
Immediate resistance is pegged near 1.2860 horizontal level and any further up-move beyond this immediate hurdle might continue to be capped at the 1.2900 handle, representing 61.8% Fibonacci retracement level of 1.3445-1.1980 downfall. Even if the pair manages to clear this important barrier, additional gains should now be limited by a horizontal resistance near 1.2960-65 zone.
Conversely, retracement back below the 1.2800 handle, leading to a subsequent drop below 1.2775-70 support, could extend the corrective slide towards 1.2700 round figure mark, which if broken would negate any near-term bullish bias and drag the pair back towards the key 200-day SMA, resistance turned support, near 1.2635-30 region.
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