GBP/USD jumps above mid-1.2400s, lacks follow-through
- Some cross-driven strength helped gain some positive traction in the last hour.
- The prevalent USD buying interest/persistent no-deal Brexit fears to cap gains.
The GBP/USD pair quickly reversed an early European session dip to the 1.2825 area and rallied over 30-pips in the last hour, refreshing session tops.
The latest leg of a sudden pick up in the British Pound lacked any obvious fundamental catalyst and could be solely attributed some cross-driven strength, stemming out of dismal Euro-zone PMI-led downfall in the EUR/GBP cross.
The pair jumped back above mid-1.2400s, albeit might struggle to extend the positive momentum amid a strong follow-through US Dollar buying interest - supported by diminishing odds of a 50 bps rate cut by the Fed.
This coupled with persistent Brexit-related uncertainties might hold traders from buying the British Pound and further collaborated towards capping any meaningful up-move, rather prompt some fresh selling at higher levels.
Given that the new UK PM Boris Johnson is known for his hardline stance on Brexit and has repeatedly insisted to leave the EU on October 31, growing fears of a no-deal Brexit should continue to keep the GBP bulls on the defensive.
Hence, it would be prudent to wait for a sustained move back above the key 1.2500 psychological mark before traders start positioning for any meaningful recovery amid absent relevant market moving economic releases from the UK.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
