GBP/USD bulls eyeing a sustained move beyond 1.2200 handle amid Brexit optimism

• The British Pound remained well supported by receding no-deal Brexit fears.
• Bulls largely shrugged off Wednesday’s disappointing UK August services PMI.
• Focus remains on the key UK Parliament vote to stop no-deal Brexit on Oct. 31.

The GBP/USD pair spiked to fresh weekly tops in the last hour, levels beyond the 1.2200 handle in the last hour, albeit quickly retreated few pips thereafter.

The pair built on the overnight strong rebound of around 150-pips and continued gaining positive traction through the mid-European session on Wednesday. The momentum seemed rather unaffected by the disappointing release of UK services PMI, rather remained well supported by receding fears of a no-deal Brexit.

Brexit optimism continues to underpin

The fact that the UK House of Commons on Tuesday passed a motion aimed at taking control of the daily agenda from the government, investors seemed convinced that the Parliament will back Wednesday’s vote on the extension bills and continued fueling the ongoing short-covering move around the Sterling.

Later this Wednesday, MPs will also vote on the motion for a general election, expected during mid-October, which if passes will add to the unpredictability at a time when the economy is already struggling and seemed to be the only factor holding investors from placing any fresh bullish bets/capping further gains.

On the other hand, the US Dollar bulls failed to capitalize on a goodish pickup in the US Treasury bond yields and remained on the defensive amid firming expectations that the Fed might opt to ease monetary policy more aggressively at its upcoming meeting this September.  

It will now be interesting to see the pair is able to find acceptance beyond the 1.2200 handle, setting the stage for additional recovery, or witnesses some fresh selling pressure following the 250-pips rally over the past 24-hours or so.

Technical levels to watch