- Sustained USD selling bias assisted GBP/USD to reverse an intraday dip to mid-1.3000s.
- Bulls shrugged off concerns over rising coronavirus infections in the UK, no-deal Brexit.
- Some repositioning trade ahead of Thursday’s BoE decision might infuse some volatility.
The heavily offered tone surrounding the greenback pushed the GBP/USD pair to fresh weekly tops, around the 1.3135-40 region during the mid-European session.
Following an early dip to mid-1.3000s, the pair caught some strong bids and built on the previous day's goodish bounce of around 90 pips from the 1.2980 region. The momentum was exclusively sponsored by sustained US dollar selling bias, which remained unabated through the major part of the European trading session on Wednesday.
The ever-increasing coronavirus cases dampened prospects for a swift US economic recovery and forced investors to continue dumping the greenback. This coupled with the impasse over the next round of the US fiscal stimulus package further undermined the USD. Even a goodish rebound in the US Treasury bond yields failed to provide any respite to the USD bulls.
Apart from a broad-based USD weakness, some technical buying on a sustained move beyond the 1.3100 mark provided an additional boost to the GBP/USD pair. However, concerns about the second wave of the COVID-19 infections in the UK, coupled with renewed fears of a no-deal Brexit might hold investors from placing aggressive bullish bets and cap the upside.
This makes it prudent to wait for some strong follow-through buying before confirming the resumption of the GBP/USD pair's recent strong bullish momentum witnessed over the past one month or so. That said, some repositioning trade ahead of the Bank of England's monetary policy decision on Thursday might infuse some intraday volatility.
In the meantime, traders are likely to take cues from Wednesday's US economic docket – highlighting the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI. The data might influence the USD price dynamics and produce some short-term trading opportunities during the early North American session.
Technical levels to watch
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