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  • GBP/USD continued scaling higher for the third consecutive session on Thursday.
  • The passage of Brexit deal into law extended some support to the British pound.
  • The risk-on mood undermined the safe-haven USD and remained supportive.

The buying interest around the British pound picked up pace during the early European session and pushed the GBP/USD pair further beyond mid-1.3600s, or fresh 31-month tops.

The pair built on the previous day’s strong positive move back above the 1.3600 mark and gained some follow-through traction for the third consecutive session on Thursday. The sterling was supported by the passage of post-Brexit trade deal in the UK Parliament. This, coupled with sustained US dollar selling bias, provided an additional boost to the GBP/USD pair.

The USD Index languished near multi-year lows amid the increasing likelihood of additional US financial aid package and expectations that the Fed will keep rates lower for a longer time. Apart from this, hopes for a strong global economy in 2021 remained supportive of the prevalent risk-on environment, which further dented the greenback’s relative safe-haven status.

Meanwhile, Thursday’s move up could further be attributed to some technical buying on a sustained move beyond the previous double-top resistance near the 1.3620-25 region. This, in turn, might have already set the stage for a further near-term appreciating move for the GBP/USD pair. Hence, a subsequent strength, towards reclaiming the 1.3700 mark, looks a distinct possibility.

That said, investors remain concerned about the exclusion of the crucial services sector, which make up 80% of the British economy, from the Brexit agreement. Adding to this, an unprecedented level of COVID-19 infection across the UK might hold bulls from placing fresh bets and keep a lid on any further gains for the GBP/USD pair amid year-end thin trading volumes.

Market participants now look forward to Thursday’s US economic docket – highlighting the only release of usual Initial Weekly Jobless Claims. This, along with the broader market risk sentiment and developments surrounding the coronavirus saga, might influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair.

Technical levels to watch