- The pair managed to find decent support ahead of the 1.2500 handle.
- The uptick lacked any obvious catalyst and strong bullish conviction.
- Renewed USD buying might further collaborate towards capping gains.
The GBP/USD pair rallied over 100 pips from the mid-European session swing lows and surged beyond the 1.2600 handle in the last hour, back closer to the top end of its daily trading range.
The pair stalled its sharp intraday pullback witnessed during the early part of Monday's trading action and managed to attract some decent buying interest just ahead of the key 1.2500 psychological mark, despite renewed Brexit related uncertainties.
Brexit uncertainties to cap gains
Irish Foreign Minister Simon Coveney's comments earlier this Monday, saying that we are still far from a Brexit deal fueled market concerns that the UK and European leaders may not reach a deal by the fast-approaching Brexit deadline on October 31.
This was followed by reports, which cited senior EU officials saying that they are not optimistic about chances of Boris Johnson getting a Brexit deal through parliament and exerted some additional downward pressure on the British Pound.
Meanwhile, the latest leg of a sudden upsurge over the past hour or so lacked any obvious fundamental catalyst and hence, runs the risk of fizzling out rather quickly amid the prevalent bid tone surrounding the US Dollar.
Hence, it will be prudent to wait for a subsequent buying interest beyond daily tops – around the 1.2645-50 region – before traders start positioning for an extension of the pair's strong up-move witnessed over the past two trading sessions.
Technical levels to watch
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