GBP/USD fades a knee-jerk bullish spike to levels beyond 1.3300 mark

Haresh Menghani FXStreet

• News that DUP is considering to support government’s deal lifts the British Pound.
• The upside remains capped ahead of the final Brexit vote on Article 50 extension.

The GBP/USD pair managed to recover a major part of the early lost ground and jumped back above the 1.3300 handle in the last hour, albeit quickly retreated few pips thereafter.

Having touched an intraday low level of 1.3239, the pair managed to regain some traction and the uptick picked up the pace during the early European session in reaction to unconfirmed news that the DUP is considering to support the government's deal.

The uptick, however, lacked any strong bullish conviction as investors preferred to wait for this week's final Brexit vote on an extension of the March 29 deadline. The UK Parliament on Wednesday voted to reject the idea to leave the European Union without a trade deal and would vote again on Thursday for an extension of Article 50.

Meanwhile, questions on whether there would be a short extension or a long extension held investors from placing any aggressive bullish bets, which coupled with a modest US Dollar uptick, supported by a strong rebound in the US Treasury bond yields, further collaborated towards keeping a lid on additional gains.

Hence, it would be prudent to wait for a strong follow-through buying before traders start positioning for a fresh leg of an up-move amid absent relevant major market-moving economic releases either from the UK or the US.

Technical levels to watch

Yohay Elam, FXStreet's own Analyst writes, “1.3365 was the February high and remains relevant. 1.3388 was the fresh peak seen on Wednesday. The next levels date to June 2018. 1.3485 capped cable in June and 1.3625 held it down in May. The next levels are 1.3710 and 1.3920.”

“Some support awaits at 1.3240 which was the daily low, and it is followed by levels such as 1.3185, 1.3150, and 1.3110 that were relevant before the recent volatility sent GBP/USD all over them. The most significant downside support is 1.2960 which was a double-bottom,” he added further.

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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