- A combination of factors assisted GBP/USD to gain traction for the fourth straight day.
- The US fiscal impasse, falling US bond yields continued undermining the greenback.
- The sterling witnessed some short-covering ahead of the UK-EU Brexit negotiations.
The GBP/USD pair maintained its strong bid tone through the mid-European session and was last seen trading near the top end of its daily range, around the 1.3170-75 region.
The pair built on last week’s bounce from the key 1.3000 psychological mark and gained some strong follow-through traction on Tuesday. The uptick marked the fourth day of a positive move for the GBP/USD pair and was supported by a combination of factors.
The US dollar remained depressed amid the uncertainty over the next round of the US stimulus measures to support the US economic recovery from the coronavirus pandemic. The greenback was further weighed down by falling US Treasury bond yields and weaker economic data.
On the other hand, the British pound witnessed some short-covering move ahead of the latest formal round of negotiations on the future relationship of the UK and the EU, set to begin this Tuesday. This, in turn, remained supportive of the GBP/USD pair’s positive move.
The pair has now moved well within the striking distance of multi-month tops, around the 1.3185 region touched on August 6. A subsequent move beyond the 1.3200 mark will be seen as a fresh trigger for bullish traders and pave the way for an extension of the bullish trajectory.
Tuesday’s US economic docket features the second-tier release of Building Permits and Housing Starts, though is unlikely to provide any meaningful impetus. Hence, the incoming Brexit-related headlines will influence the GBP/USD pair’s momentum ahead of Wednesday’s FOMC meeting minutes.
Technical levels to watch