GBP/USD adds more than 1% above 1.22 as lawmakers approve bill to delay Brexit

After dipping below the 1.20 mark for the first time in nearly three years on Tuesday, the GBP/USD pair staged a sharp U-turn and closed the day in the positive territory on hopes of lawmakers blocking a no-deal Brexit and forcing British Prime Minister Boris Johnson to ask for a three-month extension to Brexit and call a snap election.

As expected, British lawmakers today approved the bill that won't allow the UK to crash out of the EU. Following this development, PM Johnson called for an election on October 15, saying that the country now has to decide if opposition leader Jeremy Corbyn or himself will go to Europe to finalize the negotiations.

USD remains under selling pressure

Furthermore, the GBP/USD pair preserved its bullish momentum on Wednesday with the help of the broad-based selling pressure surrounding the Greenback and rose above the 1.22 handle. As of writing, the pair was up 1.15% on a daily basis at 1.2220.

The US Dollar Index (DXY), which fell sharply on Tuesday after the PMI data showed contraction in the manufacturing sector and revived fears of a recession, extended its slide today and was last down 0.55% on the day at 98.41.

Although the Federal Reserve's Beige Book today said that the majority of businesses that were surveyed were still optimistic about the near-term outlook despite concerns about tariffs and the trade uncertainty, the DXY failed to retrace its fall. 

Commenting on the impact of the uninspiring data on the Federal Reserve's policy outlook, "Given the potential for the slowdown to spread to other sectors and the fact other major central banks are moving in the direction of policy loosening, which is pushing the dollar higher, we look towards the Fed to offer more support to the US economy," ING's Chief International Economist James Knightley said.

Technical levels to watch for