GBP/USD jumps to weekly tops, bulls await a sustained break through 1.2750 supply zone

  • The USD remains on the defensive amid increasing Fed rate cut bets.
  • UK political and Brexit uncertainties might cap further strong gains.

The GBP/USD pair spiked to fresh weekly tops in the last hour, with bulls still awaiting a sustained break through the 1.2750 supply zone.

Having consolidated in a range through the Asian session on Wednesday, the pair regained traction for the second consecutive session and added to the previous session's modest gains amid a subdued US Dollar demand. 

Investors remained convinced that the Fed will eventually cut interest rates sooner rather than later, especially after the US President Donald Trump's criticized on Tuesday that the Fed was keeping interest rates way too high.

Adding to this, some renewed weakness in the US Treasury bond yields - led by a slight deterioration in the global risk sentiment, exerted some additional pressure on the greenback and was seen benefitting the major.

However, persistent UK political uncertainty, coupled with rising fears of a no-deal Brexit might hold investors from placing any aggressive bullish bets and turn out to be the only factor keeping a lid on any meaningful up-move. 

As Yohay Elam, FXStreet's own Analyst explains – “Johnson will likely say that the UK must leave the EU on October 31st, come rain or shine – deal or no-deal – a pledge that will please party members but will hurt markets and the pound.”

Hence, it would be prudent to wait for a convincing break through the mentioned barrier before traders start positioning for any further near-term appreciating move amid absent relevant UK macroeconomic releases.

Later during the early North-American session, the US economic docket - highlighting the release of the latest consumer inflation figures, will now be looked upon to grab some short-term trading opportunities.

Technical levels to watch

Yohay also offered important technical levels to trade the major – “Resistance awaits at 1.2750 which was a triple top in May and June. It is closely followed by 1.2765 which was the peak on Friday, 1.2815 that was a swing high in late May, and April low of 1.2870.”

“Looking down, support awaits at 1.2670 which was a low point on Tuesday and then by 1.2640 – where uptrend support was formed earlier this month. 1.2605 and 1.2558 are next,” he added further.

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