GBP/USD Forecast: Stage seems set for a move beyond 1.3300 mark

The British pound caught some aggressive bids on Wednesday and assisted the GBP/USD pair to post its strongest single-day gains since March. The incoming Brexit-related headlines raised prospects for the resumption of Brexit talks, which, in turn, prompted traders to unwinding their GBP bearish bets. The EU's chief Brexit negotiator, Michel Barnier said that a Brexit agreement is within reach and showed readiness to discuss all subjects based on the legal text. Apart from Brexit developments, the heavy offered tone surrounding the US dollar further collaborated to the pair's strong intraday positive move of over 140 pips.

News that the US President Donald Trump was willing to accept a large aid bill raised hopes for a pre-election stimulus breakthrough and helped boost investors' confidence. This, in turn, undermined demand for the safe-haven greenback and provided an additional boost to the major. Prospects for more government borrowing sparked a selloff in the US Treasuries and pushed the yield on the benchmark 10-year government bond to over four-month tops. The lack of demand for government debt exerted some additional downward pressure on the buck. Bulls largely shrugged off the imposition of fresh lockdown measures to curb the second wave of the coronavirus infection in the UK.

The pair shot to an intraday high level of 1.3176, though uncertainty over the next round of the US fiscal stimulus capped any further upside, at least for the time being. Despite positive developments, investors remain sceptic that any package can actually pass through the Senate amid strong opposition from within Trump’s own Republican Party. Adding to this, Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise on stimulus. The slow pace of US stimulus talks took its toll on the global risk sentiment and provided a much-needed respite to the USD bulls.

The pair consolidated the overnight upsurge and was seen oscillating in a narrow trading band through the Asian session on Thursday. In the absence of any major market-moving economic releases from the UK, developments surrounding the Brexit saga will continue to play a key role in driving the sentiment around the sterling. Meanwhile, the US economic docket features the release of the usual Initial Weekly Jobless Claims. This, along with the US stimulus headlines, will influence the USD price dynamics and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the overnight strong momentum confirmed a near-term bullish breakthrough a symmetrical triangle and supports prospects for additional gains. Bulls, however, took a brief pause near a resistance marked by the 61.8% Fibonacci level of the 1.3482-1.2676 recent pullback. This makes it prudent to wait for a sustained move beyond the mentioned barrier, around the 1.3175 region, before placing fresh bullish bets. The pair might then surpass the 1.3200 mark and aim to test the 1.3235 horizontal resistance. The momentum could further get extended towards the 1.3300 mark en-route the 1.3320 hurdle.

On the flip side, any meaningful pullback now seems to find decent support near the 1.3100 round-figure mark. Subsequent weakness will now be seen as a buying opportunity, which, in turn, should help limit the downside near the 50% Fibo. level, around the 1.3070-65 region. That said, some follow-through selling might still drag the pair back towards the triangle resistance breakpoint, now turned support, currently near the 1.3010-1.3000 region.