GBP/USD jumps to 2-week highs near 1.3050 amid Brexit optimism

Latest Brexit headlines provide a boost to the GBP.
Falling US T-bond yields weigh on the buck on Tuesday.
US Dollar Index drops to 10-day lows near mid-96s.

Eren Sengezer FXStreet

After breaking above the critical 200-DMA, the GBP/USD pair extended its rally and rose to its best level in two weeks at 1.3050. As of writing, the pair was up 0.88% on the day at 1.3035.

The combination of a heavy selling pressure surrounding the greenback and a stronger British pound amid Brexit optimism on Tuesday supported the pair's upsurge. Responding to a question whether the 'Malthouse Compromise' Brexit proposal designed by members of PM May's Conservative Party was dead, British Prime Minister Theresa May's spokesman said that he wouldn't characterise things in that way. Additionally, junior business minister Richard Harrington told reporters that he did not believe that there would be a no-deal Brexit to give the initial boost to the currency.

Meanwhile, the UK's Office for National Statistics earlier today announced that the claimant count change fell to 14.2K in January from 20.8K in December and the ILO unemployment rate remained unchanged at 4% as expected.

On the other hand, yet another more-than-1% drop seen in the 10-year US T-bond yield on Tuesday weighed on the buck and forced the US Dollar Index to erase its daily gains and slump to its lowest level since February 8 at 96.55. At the moment, the DXY is losing 0.18% on the day at 96.60.

Technical levels to consider

The initial resistance for the pair now aligns at 1.3100 (Feb. 4 high) ahead of 1.3160 (Jan. 31 high) and 1.3210 (Jan. 28 high). On the downside, supports could be seen at 1.3000 (psychological level), 1.2935 (200-DMA) and 1.2880 (50-DMA). With today's upsurge, the RSI indicator on the daily chart rose above 50, suggesting that the bullish momentum is gathering strength.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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