• UK-EU announce draft transition pact and prompts aggressive short-covering move.
• The up-move takes along stops placed at 1.40 mark and aggravates the momentum.
The GBP/USD pair built on its strong daily gains and surged to over 1-month highs on the back of latest Brexit headlines.
The British Pound caught some strong bids during the early European session and took along stops placed at the key 1.40 psychological mark, prompting some aggressive short-covering move, after the UK and EU leaders struck a preliminary 21-month Brexit transition deal.
At the joint EU-UK Brexit press conference, comment by the EU chief negotiator Michel Barnier and the UK's Brexit secretary David Davis eased prolonged Brexit worries and lifted the pair to an intraday high level of 1.4088.
Today's up-move further beyond the 1.4030-40 region reinforced last week's bullish break above a short-term descending trend-line resistance and hence, a follow-through up-move, led by some fresh long build-up, now looks a distinct possibility.
Technical levels to watch
Bulls might now be eyeing to reclaim the 1.4100 handle, above which the pair seems all set to test mid-1.4100s intermediate resistance en-route the 1.4200 round figure mark. On the flip side, any meaningful retracement now seems to find immediate support near the 1.40 handle, below which the pair could correct back towards 1.3920-10 support area.
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