GBP/USD clings to gains above 1.3600 mark, highest since May 2018 post-BoE

• GBP/USD continued scaling higher for the fourth consecutive session on Thursday.
• Hopes for a last-minute Brexit deal was seen as a key factor underpinning the GBP.
• The latest BoE monetary policy decision did little to provide any meaningful impetus.

The strong buying interest around the British pound pushed the GBP/USD pair beyond the 1.3600 mark for the first time since May 2018. The pair was last seen trading around the 1.3615 region, up around 0.80% for the day.

The pair built on this week’s strong bullish momentum and continued scaling higher for the fourth consecutive session on Thursday. The sterling was boosted by the progress in Brexit talks, which, along with the heavily offered tone surrounding the US dollar remained supportive of the ongoing upward trajectory.

In the latest Brexit-related headlines, the UK Cabinet Minister Michel Gove said in a statement on Thursday that we will do everything to secure a good Free Trade Agreement. Separately, an EU official was reported saying that the European Union could possibly reach a trade deal with the United Kingdom by the end of the week.

Apart from Brexit optimism, sustained USD selling bias provided an additional boost to the GBP/USD pair. The USD Index plunged to fresh two-and-half-year lows amid prospects for additional US fiscal stimulus. In fact, Republicans and Democrats in the US Congress were reportedly closing in on approving a $908 billion COVID-19 relief package.

This comes on the back of the positive news about the rollout of vaccines for the highly contagious coronavirus disease, which boosted investors’ confidence and further undermined the USD’s relative safe-haven status. The greenback was further pressured by the Fed’s promise on Wednesday to keep interest rates near zero for years to come.

The GBP/USD pair had a rather muted reaction to the latest BoE monetary policy decision. As was widely expected, the BoE’s Monetary Policy Committee (MPC) decided to leave the benchmark interest rate unchanged at 0.10% at its December policy meeting. The central bank also kept the Asset Purchase Facility steady at £895 billion.

The announcement turned out to be a non-event for the market as the focus remains on developments surrounding the Brexit saga. Meanwhile, the GBP/USD pair now seems to have found acceptance above a near three-month-old descending trend-channel resistance. This might have already set the stage for additional gains.

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