- Some cross-driven strength triggers the initial leg of short-covering bounce.
- A modest USD pullback from multi-week tops provides an additional boost.
- Possibilities of some intraday stops being triggered accelerate the up-move.
The GBP/USD pair surged through the key 1.2500 psychological mark and refreshed weekly tops in the last hour.
After an early European session dip, the pair witnessed a dramatic turnaround and has now rallied nearly 100-pips from intraday lows around the 1.2425 region. The initial leg of recovery was triggered by some cross-driven strength, stemming out of a sharp intraday slide in the EUR/GBP cross.
The uptick got an additional boost in the wake of a modest US Dollar pullback from five-week tops, which coupled with possibilities of some intraday stops being triggered on a sustained move beyond the overnight swing high – around the 1.2480-85 region, aggravated the short-covering bounce.
It, however, remains to be seen if the recovery is backed by any genuine buying or is solely fueled by short-covering, which runs the risk of fizzling out rather quickly amid persistent fears of a no-deal Brexit and absent relevant market moving economic releases from the UK.
Technical levels to watch
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