• GBP/USD gained strong positive traction for the third successive day on Thursday.
  • Receding Omicron fears turned out to be a key factor that benefitted the sterling.
  • A modest USD strength could keep a lid on any further gains ahead of the US data.

The GBP/USD pair broke out of its intraday consolidative trading range and shot to a near one-month high, around the 1.3385 region during the early part of the European session.

The pair prolonged this week's solid rebound from the vicinity of the YTD low, around the 1.3175 region and gained strong follow-through traction for the third successive day on Thursday. The latest optimism was led by reports that current vaccines may be more effective in fighting the new variant than first thought. This helped offset worries about surging COVID-19 cases in the UK and was seen as a key factor providing a tailwind for the British pound.

A South African study suggested people infected with Omicron had reduced risks of hospitalisation and severe disease compared with the Delta strain. The news added to the optimistic market mood, which, in turn, undermined the greenback's safe-haven status. That said, an uptick in US Treasury bond yields, along with the Fed's hawkish outlook helped limit the USD's losses. This, along with Brexit uncertainties, could cap gains for the GBP/USD pair.

the UK Foreign Minister Liz Truss – now in charge of Brexit negotiations – said that their position on the Northern Ireland Protocol remains unchanged. Truss reiterated that we must end the role of the European Court of Justice as a final arbiter in the arrangement and that the UK remains prepared to trigger Article 16 if this does not happen. Conversely, the Irish Prime Minister was reported as saying that talks between the EU and the UK were on track for progress.

The GBP/USD pair has so far managed to preserve its strong intraday gains and a move beyond the post-BoE swing high, and this might set the stage for additional gains. There isn't any major market-moving economic data due for release from the UK, so USD price dynamics will continue to play a key role in influencing the pair. Later during the early North American session, traders will take cues from the US macro releases.

The US economic docket highlights the release of Core PCE Price Index and Durable Goods Orders data. This, along with the development surrounding the coronavirus saga and the broader market risk sentiment, will drive USD demand and provide some impetus to the GBP/USD pair. Apart from this, traders will take cues from the incoming Brexit-related headlines to grab some short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Today last price 1.338
Today Daily Change 0.0017
Today Daily Change % 0.13
Today daily open 1.3363
 
Trends
Daily SMA20 1.3269
Daily SMA50 1.3462
Daily SMA100 1.3594
Daily SMA200 1.3759
 
Levels
Previous Daily High 1.3363
Previous Daily Low 1.324
Previous Weekly High 1.3374
Previous Weekly Low 1.3172
Previous Monthly High 1.3698
Previous Monthly Low 1.3194
Daily Fibonacci 38.2% 1.3316
Daily Fibonacci 61.8% 1.3287
Daily Pivot Point S1 1.3281
Daily Pivot Point S2 1.3199
Daily Pivot Point S3 1.3158
Daily Pivot Point R1 1.3404
Daily Pivot Point R2 1.3445
Daily Pivot Point R3 1.3527

 

 

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