GBP/USD refreshes weekly tops, 1.3800 mark back in sight

The GBP/USD pair continued scaling higher heading into the North American session and climbed to fresh weekly tops, around the 1.3775 region in the last hour.

The pair built on the previous day's solid rebound of over 130 pips from sub-1.3600 levels and gained some strong follow-through traction for the second consecutive session on Thursday. The momentum lacked any obvious fundamental catalyst and could be solely attributed to some cross-driven strength stemming from a sharp fall in the EUR/GBP.

Apart from this, a generally positive tone around the equity markets acted as a headwind for the safe-haven US dollar and provided an additional boost to the GBP/USD pair. On the economic data front, the US Initial Weekly Jobless Claims unexpectedly jumped to 419K during the week ended July 16 from the previous week's upwardly revised reading of 368K.

That said, the resurgence of the COVID-19 infections in the UK, along with the impasse over the Northern Ireland Protocol of the Brexit deal might cap gains for the GBP/USD pair. In fact, new cases have been rising by more than 50,000 a day in the UK. On the Brexit front, the EU rejected the UK’s demand for a new approach to the Northern Ireland Protocol.

Meanwhile, the UK Prime Minister spokesman told reporters this Thursday that Johnson had spoken to EU Commission Head and urged the EU to look at the proposals seriously. Hence, it will be prudent to wait for some strong follow-through buying before confirming that the GBP/USD pair has bottomed out in the near-term and positioning for any further appreciating move.

Technical levels to watch