- Renewed hopes for a possible last-minute Brexit deal assisted GBP/USD to regain traction on Tuesday.
- COVID-19 vaccine, expectations for more US stimulus undermined the USD and remained supportive.
- Mixed UK employment detail did little to influence or provide any meaningful impetus to the major.
The GBP/USD pair held on to its modest gains near session tops, just below mid-1.3300s and had a rather muted reaction to the UK macro release.
Following the previous day’s sharp pullback of around 140 pips, the pair managed to regain positive traction on Tuesday and remained well supported by hopes for a last-minute Brexit deal. It is worth recalling that Britain and the European Union agreed to extend Brexit negotiations beyond Sunday’s deadline. Adding to the optimism, the EU’s chief Brexit negotiator, Michel Barnier reported said on Monday that they could reach a deal on Brexit if a solution on fishing is found.
Meanwhile, the US dollar languished near two-and-half-year lows amid the recent enthusiasm over the rollout of vaccines for the highly contagious coronavirus disease. This, along with expectations for additional US fiscal stimulus measures, exerted some additional downward pressure on the greenback and remained supportive of the intraday positive move for the GBP/USD pair.
On the economic data front, the UK monthly employment details came in to show that the number of people claiming unemployment-related benefits jumped to 64.3K in November. The disappointment, to a larger extent, was offset by better-than-expected unemployment rates, which edged higher to 4.9% as against consensus estimates pointing to a rise to 5.1% from 4.8% previous
The report, however, did little to provide any meaningful impetus as the focus remains on developments surrounding Brexit saga. That said, the imposition of stricter lockdown restrictions in London and the discovery of a new variant of the coronavirus might hold the GBP bulls from placing aggressive bets. This, in turn, might keep a lid on any strong gains for the GBP/USD pair.
Technical levels to watch
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