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  • GBP/USD regained positive traction on Wednesday amid renewed hopes for a Brexit deal.
  • The emergence of some fresh selling around the USD remained supportive of the move.
  • COVID-19 jitters might hold investors from placing aggressive bets and cap the upside.

The GBP/USD pair refreshed daily tops, around the 1.3445 region in the last, albeit quickly retreated few pips thereafter. The pair was last seen trading near the 1.3420-25 region, up around 0.50% for the day.

The pair built on the overnight late rebound from the vicinity of the 1.3300 mark and gained some strong follow-through traction through the first half of the trading action on Wednesday. Despite the lack of progress in Brexit negotiations, investors remain hopeful about the possibility of a last-minute EU-UK deal. This was seen as one of the key factors lending some support to the British pound.

It is worth reporting that the EU’s chief negotiator said that there are still deep rifts over fishing rights. Adding to this, British Prime Minister Boris Johnson had warned on Monday that there are still problems in securing a post-Brexit trade deal. However, ITV’s political editor Robert Peston tweeted – citing a UK source – that a deal between the UK and the EU is on the table this Wednesday.

The GBP/USD pair continued scaling higher through the first half of the European session and was further supported by the emergence of some fresh selling around the US dollar. As investors looked past the US President Donald Trump’s threat to not sign a long-awaited coronavirus relief bill, a goodish rebound in the equity markets dented the greenback’s perceived safe-haven status

That said, concerns about the discovery of a new fast-spreading coronavirus variant and the imposition of strict lockdown/travel restrictions in the UK might hold investors from placing aggressive bets. This, in turn, might keep a lid on any runaway rally for the GBP/USD pair amid absent relevant market moving economic releases from the UK and relatively thin liquidity ahead of Christmas Holidays.

The market focus will remain glued to the incoming Brexit-related headlines and developments surrounding the coronavirus saga. Apart from this, traders might take cues from the US economic releases – Durable Goods Orders and Initial Weekly Jobless Claims. The data might influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair.

Technical levels to watch