GBP/USD climbs further beyond 1.3000, highest since March 10 ahead of US GDP

• GBP/USD reversed an early dip to the 1.2965 region and turned positive for the ninth straight day.
• A sharp fall in the US bond yields, the impasse over the US fiscal stimulus capped the USD rebound.
• Overbought conditions on the daily chart warrant some caution for bulls ahead of the US GDP print.

The GBP/USD pair rallied around 50-55 pips from daily swing lows and jumped back above the key 1.3000 psychological mark, hitting the highest level since March 10 in the last hour.

As investors looked past a more dovish FOMC statement, the US dollar staged a modest rebound from two-year lows and drove some haven flows amid a sharp turnaround in the global risk sentiment. This, in turn, exerted some pressure on the GBP/USD pair, though the early downtick was quickly bought into near the 1.2965 region.

A steep decline in the US Treasury bond yields kept a lid on the attempted USD recovery move. This coupled with the impasse over the next round of the US fiscal stimulus measures further held the USD bulls from placing any aggressive bets and extended some support, rather assisted the GBP/USD pair to attract some dip-buying.

The pair moved into the positive territory for the ninth consecutive session and took along some short-term trading stops near the 1.3000 mark, setting the stage for additional gains. However, overbought conditions on the daily chart warrant some caution before positioning aggressively for any further appreciating move.

Market participants now look forward to the US economic docket, highlighting the release of the Advance Q2 GDP report for a fresh impetus. The world’s largest economy is expected to have collapsed by a record 34.1% annualized pace during the second quarter of 2020. Any significant divergence from the expected number will influence the USD price dynamics and produce some meaningful trading opportunities around the GBP/USD pair.

Technical levels to watch