GBP/USD climbs to session tops, eyeing to reclaim 1.3100 mark

• GBP/USD gained traction on Thursday and recovered further from Wednesday’s over one-week lows.
• The heavily offered tone surrounding the USD was seen as a key factor behind the pair’s positive move.
• The near-term technical set-up warrants some caution before placing any aggressive directional bets.

The GBP/USD pair jumped to fresh session tops in the last hour, with bulls now eyeing a move towards reclaiming the 1.3100 round-figure mark.

The pair gained some positive traction on Thursday, snapping two consecutive days of the losing streak and recovered further from the key 1.3000 psychological mark, or over one-week lows set in the previous day. The positive move was exclusively sponsored by the prevalent offered tone surrounding the US dollar, which remained depressed in the wake of the impasse over the next round of the US fiscal stimulus.

The greenback was further pressured by a fresh leg down in the US Treasury bond yields after a record $38 billion auction. This comes amid the latest optimism over a potential vaccine for the highly contagious coronavirus disease, which further undermined the USD’s relative safe-haven status against its British counterpart. This, in turn, remained supportive of the intraday positive move for the GBP/USD pair.

Apart from a broad-based USD weakness, the uptick lacked any obvious fundamental catalyst and hence, runs the risk of fizzling out rather quickly. Expectations that the US lawmakers will eventually reach a consensus on the stimulus measures might hold investors from placing aggressive USD bearish bets and keep a lid on any strong gains for the GBP/USD pair.

Even from a technical perspective, the pair has been oscillating in a broader trading range since the beginning of this month. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move. Conversely, a sustained break below the 1.3000 mark will be seen as a fresh trigger for bearish traders.

Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch