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  • GBP/USD witnessed a dramatic intraday turnaround from the 1.2820 region.
  • Positive Brexit-related headlines prompted aggressive short-covering rally.
  • A weaker tone surrounding the USD remained supportive of the strong move.

The GBP/USD pair rallied over 150 pips during the mid-European session and shot to near two-week tops, around the 1.2975 region in the last hour.

The pair had some good two-way price swings on Thursday and was exclusively driven by the incoming Brexit-related headlines. A sharp turnaround from an intraday low level of 1.2819 was sponsored by reports that officials in London are increasingly optimistic about finalizing a Brexit deal.

Financial Times correspondent Sebastian Payne tweeted on Thursday that officials with knowledge of the talks said a landing zone on state aid has been identified but fishing is the last sticking point. The latest development triggered some aggressive short-covering move around the British pound.

On the other hand, the US dollar remained on the defensive on the back of the overnight conflicting messages about the next round of the US fiscal stimulus measures. The US Treasury Secretary Steven Mnuchin told reporters that talks with House Speaker Nancy Pelosi made a lot of progress on long-awaited COVID-19 relief legislation. Meanwhile, Senate Majority Mitch McConnell said that the two sides remain far apart.

A softer tone surrounding the greenback was seen as another factor that provided an additional boost to the GBP/USD pair and remained supportive of the strong bid tone for the fourth consecutive session. The USD bulls seemed rather unimpressed by mostly better-than-expected US macro data – Initial Weekly Jobless Claims and core PCE price index.

Thursday’s US economic docket also features the release of the ISM Manufacturing PMI. The data, however, is unlikely to provide any meaningful impetus to the GBP/USD pair as investors might refrain from placing aggressive ahead of Friday’s release of the closely watched US monthly jobs report – popularly known as NFP.

Technical levels to watch