GBP/USD rallied from 1.2369 to 1.2538 on Monday. The sharp gains were partly driven by the broad based US dollar sell-off.
More importantly, the British Pound scored gains a day ahead of the all important Supreme Court decision on Brexit. Many in the markets believe the lawmakers will refuse hard Brexit and ask PM May to adopt a soft Brexit.
That could be the reason for the stellar rally in the British Pound. On the other hand, many believe that the currency could rally even if the Supreme Court decides that PM May does not need to go for the parliamentary vote.
Moreover, anything that provides clarity on Brexit (irrespective of whether hard or soft) is seen boosting the currency.
GBP/USD Technical Levels
The currency pair closed at 1.2533; highest level in more than 5 weeks. The spot was last seen trading around 1.2540. A break above 1.2568 (Dec 15 high) would expose 1.26 (zero figure) above which the spot may target 1.2674 (Nov 11 high). On the other hand, a breakdown of support at 1.25 could yield a re-test of support at 1.2408 (hourly 50-MA) and 1.2359 (hourly 100-MA).
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