GBP/USD rally halts at 1.2530 and retreats to 1.2460

Sterling’s rally from Monday’s low at 1.2250 has been capped at 1.2530 before pulling back to 1.2460 during Thursday’s US trading session. The pound has lost steam after rallying 1.4% over the previous two days and has turned negative on the day.

Brexit uncertainty remains weighing on the GBP

The GBP/USD rallied earlier this week as a batch of positive macroeconomic data boosted hopes of a quick economic recovery. The improved risk sentiment slashed demand for safe assets and sent the dollar lower across the board.

Cable rally, however, has been limited below the top of the last two-weeks’ trading range, at 1.2540. The pair remains weighed by Brexit uncertainty amid the lack of progress in the EU UK negotiations. A meeting scheduled for next Friday has been delayed for next week due to the divergences between the two parties, which casts serious doubts about the possibility of reaching an agreement before the end of the transition period in December 2020.

GBP/USD targeting the 200-DMA at 1.2684 – Commerzbank

From a technical point of view, Commerzbank’s Karen Jones sees the pair biased higher while above 1.2247, aiming towards 1.2684, “GBP/USD has recovered off the 1.2247 mid-April low. Initial resistance is the 20-day ma at 1.2517 and this guards the 200-day ma at 1.2684 and we suspect this may hold the initial test. Above 1.2684 targets the 78.6% retracement at 1.2818 (of the move down from the March peak) and the 200-week ma at 1.2911.” 

GBP/USD key levels to watch