GBP/USD climbs to session tops, closer to 1.2700 handle

Haresh Menghani FXStreet

• The ongoing USD retracement helps regain traction near the 1.2600 mark.
• Barclay’s Brexit comments provided an additional boost in the last hour.

After an initial dip to the 1.2600 neighborhood, the GBP/USD pair caught some fresh bids and was now seen building on the overnight upsurge.

A fresh wave of US Dollar selling, led by growing optimism over easing US-China trade tensions and signs of easing inflationary pressure in the US, turned out to be one of the key factors behind the latest leg of a sudden pick up over the past hour or so.

A slew of news this week provided some concrete evidence that China is making good on pledges made at the Trump-Xi meeting on December 1st and pointed to easing tensions between the world's two largest economies.

Adding to this, data released on Wednesday showed that the headline US CPI was unchanged in November, while the yearly rate slowed to 2.2% and is now near the lowest level of the year, which exerted some fresh downward pressure on the greenback.

Meanwhile, the British Pound got an additional boost following some positive comments by the UK Brexit Secretary Stephen Barclay, saying that the direction of travel on the backstop is moving in the right direction and both sides see it as temporary.

Additional comments by Barclay, saying that the government is trying to get the legal and political assurances on the backstop, remained supportive of the ongoing positive momentum, though concerns over May's ability to get her Brexit deal through the parliament might keep a lid on any strong follow-through.

Technical levels to watch

Bulls might now aim towards surpassing the 1.2700-1.2710 immediate resistance, above which the up-move could further get extended towards the 1.2770-80 supply zone. On the flip side, the 1.2650 level now seems to protect the immediate downside and any subsequent dips are likely to be bought into near the 1.2600 round figure mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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