GBP/USD clings to recovery gains near session tops, around mid-1.2800s

The GBP/USD pair built on its steady intraday positive move and refreshed daily tops, around mid-1.2800s during the early European session.

The British pound witnessed some short-covering move on the first day of a new trading week ahead of a crucial vote on the UK government’s so-called Internal Market Bill. The legislation drew a lot of criticism and fueled market fears that the UK will crash out of the European Union at the end of the transition period.

However, reports indicated that Alliance parties could table an amendment aimed to block the bill from proceeding. Adding to this, Ex-Prime Ministers Tony Blair, along with Sir John Major urged MPs to reject the government's attempt to override parts of Withdrawal Agreement and helped eased concerns about a no-deal Brexit.

The GBP/USD pair staged a goodish bounce from the vicinity of the very important 200-day SMA and for now, seems to have stalled a two-week-old bearish trajectory. The recovery was further supported by the prevalent selling bias around the US dollar, which remained depressed amid doubts over the next round of the US fiscal stimulus measures.

Developments surrounding the Brexit saga will continue to play a key role in influencing the sentiment surrounding the sterling amid absent relevant market-moving economic releases, either from the UK or the US. Hence, it remains to be seen if the GBP/USD pair is able to capitalize on the momentum or runs into some fresh supply at higher levels.

Technical levels to watch