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  • GBP/USD gained strong follow-through traction for the second straight session on Wednesday.
  • The prevalent risk-on environment undermined the safe-haven USD and remained supportive.
  • Investors now await the UK Parliament vote on the Brexit trade deal amid thin trading volumes.

The GBP/USD pair maintained its strong bid tone through the mid-European session, albeit seemed struggling to build on the momentum beyond the 1.3600 mark.

The pair added to the previous day’s positive move and continued scaling higher for the second consecutive session on Wednesday. The momentum was sponsored by the heavily offered tone surrounding the US dollar, which tumbled to fresh multi-year lows amid the prevalent risk-on environment.

Investors shrugged off the effective rejection of the measure to raise the direct payments to $2,000 and seemed convinced about the likelihood of additional financial aid. This, along with hopes for a strong global economic recovery in 2021, remained supportive of the upbeat market mood.

Apart from this, news that UK regulators approved the use of the AstraZeneca/Oxford coronavirus vaccine provided an additional boost to the already strong global risk sentiment. This, in turn, undermined the safe-haven USD’s relative safe-haven status against its British counterpart.

However, market participants remain concerned about the exclusion of the crucial services sector in Brexit agreement. Apart from this, a sharp rise in cases infected by the new coronavirus strain in the UK further held bulls from placing fresh bets and might cap the upside for the GBP/USD pair.

Wednesday’s key focus will be on the UK Parliament vote on legislation to enact the government’s trade deal with the European Union. In a fast-forwarding of normal proceedings for legislation, the government will get the EU (future relationship) bill through the Commons and Lords in just a day.

Meanwhile, the US economic docket – featuring the second-tier releases of Goods Trade Balance, Chicago PMI and Pending Home Sales – is unlikely to provide any meaningful impetus. This leaves the GBP/USD pair at the mercy of the broader market risk sentiment and the USD price dynamics.

Technical levels to watch