- GBP/USD managed to find some support near mid-1.3000s and rallied over 50 pips in the last hour.
- A modest uptick in the equity markets undermined the safe-haven USD and remained supportive.
- Persistent Brexit-related uncertainties might keep a lid on any runaway rally for the British pound.
The GBP/USD pair rallied over 50 pips in the last hour and refreshed daily tops, with bulls now looking to build on the momentum further beyond the 1.3100 mark.
The pair managed to find decent support near the 1.3050 region and for now, seems to have stalled this week’s retracement slide from six-week tops, set on Wednesday. The US dollar struggled to preserve its early gains, instead witnessed some fresh selling during the early European session, which, in turn, was seen as a key factor that provided a minor lift to the GBP/USD pair.
Despite the uncertainty over the next round of the US fiscal stimulus measures, the news of the first approved treatment for the highly contagious coronavirus disease boosted investors’ confidence and led to a modest uptick in the equity markets. It is worth reporting that Gilead Sciences received US FDA approval on Thursday for its antiviral therapy to treat the virus.
However, persistent Brexit-related uncertainties might hold bulls from placing any aggressive bets and keep a lid on any runaway rally for the GBP/USD pair. The UK and EU resumed talks on a trade deal on Thursday, albeit investors remain concerned about disagreements over the key sticking points – fishing access and the level playing field.
The EU’s chief Brexit negotiator, Michel Barnier had warned on Wednesday that level playing field remains a fundamental concern and that there will be no trade deal without a fair solution for fisheries. This warrants some caution for bullish traders and before positioning aggressively for any further near-term appreciating move for the GBP/USD pair.
On the economic data front, the flash version of the UK Manufacturing PMI came in slightly better than market expectations and ticked lower to 53.3 on October from 54.1 previous. This was largely offset by a larger than anticipated fall in the gauge for the services sector, which dropped to 52.3 during the reported month from 56.1 in September.
Moving ahead, market participants now look forward to the release of the flash US Manufacturing and Services PMI prints. This, along with developments surrounding the US fiscal stimulus and the broader market risk sentiment, will influence the USD price dynamics. Apart from this, the incoming Brexit headlines will also be eyed for some meaningful trading opportunities.
Technical levels to watch
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