GBP/USD bolstered into 1.2850 after US Fed gives the Greenback a beating

• Sterling-Dollar pair back into the week's highs on a dovish Fed.
• Brexit angst has been shelved for the moment, but December 11th's critical House of Commons vote still waits in the wings.

GBP/USD is trading into yesterday's highs near 1.2850 in early Thursday action after a surprisingly dovish Federal Reserve chair Jerome Powell cast doubt on the Fed's current path of rate hikes, inadvertently suggesting to broader markets that the US Fed may pull the plug on their current pace of rate hikes much sooner than expected if US economic continues to hint of a broader slowdown. Markets reacted by selling the Greenback across the board, and the Cable is enjoying a brief reprieve from Brexit selling, bolstered by the off-kilter USD.

Powell's dovish shift sparks a sell-off in the greenback

It's a mid-tier Thursday for the GBP on the economic calendar, and the most meaningful piece of data will be October's Mortgage Approvals at 09:30 GMT, which are expected to decline slightly to 64.5 thousand from 65.27 thousand, but the following US market window will likely see continued Dollar-heavy action, with US Personal Consumption Expenditure Price Index at 13:30 GMT (forecast 1.9%, previous 2.0%), followed by the latest FOMC Meeting Minutes later on at 19:00 GMT, and given Fed head Powell's latest dovish appearance, extra emphasis could be placed on US data as investors grapple with a suddenly uneasy Federal Reserve.

GBP/USD levels to watch

The challenge for Cable bulls, according to FXStreet's own Valeria Bednarik, is to find a way to keep the GBP/USD upright, with continued Brexit anxiety likely to continue in the near future, but for the time being the GBP is being well-supported by a softened Greenback: "the market forgot about Brexit for once after US Federal Reserve head, Powell, hinted policymakers could pause their rate hike cycle amid increasing risk of slower growth ahead. The GBP/USD pair soared to the current 1.2830 price zone on dollar's sell-off, although the risk of further declines on more Brexit woes is not out of the table. The 4 hours chart shows that the pair advanced above its 20 SMA but also that the 200 EMA heads south above the current level, while the Momentum indicator barely advances below its 100 level. The RSI indicator, on the contrary, heads north around 58, suggesting the current rally may continue during the upcoming sessions, or at least until the next Brexit negative headline gives speculative interest a reality check."

Support levels: 1.2810 1.2770 1.2735

Resistance levels: 1.2865 1.2900 1.2940