GBP/USD jumps to fresh multi-week tops, further beyond mid-1.2600s

• GBP/USD gains traction for the fifth consecutive session on Thursday.
• The British pound remained supported by UK’s £30B stimulus package.
• The greenback struggled near multi-week lows and remained supportive.

The GBP/USD pair continued scaling higher through the first half of trading action on Thursday and jumped to fresh three-week tops, around the 1.2660-65 region in the last hour.

A combination of factors assisted the pair to gain some strong follow-through traction for the fifth consecutive session and prolong its recent bullish trajectory, witnessed over the past two weeks or so. The British pound remained well supported by the UK Chancellor Rishi Sunak’s mini-budget presented on Wednesday.

The announced measures totalled £30 billion, which included a £2 billion kickstart scheme to create more jobs for young people. The package was consistent with market expectations and designed to spur the economic growth after the slump caused by the lockdown measures imposed to contain the outbreak of coronavirus.

On the other hand, the US dollar remained on the defensive and struggled near multi-week tops, which extended additional support to the GBP/USD pair. Despite the ever-increasing number of coronavirus cases, hopes of a sharp V-shaped global economic recovery continued driving investors away from the safe-haven USD.

This comes amid the optimism over a possible breakthrough in the post-Brexit negotiations. In fact, recent reports indicated that the EU and UK were close to finding a common ground on the issue of fishing rights. Moreover, the EU’s Chief Negotiator, Michel Barnier had said that Brussels is ready to grant the City of London access to EU markets.

Apart from this, Thursday’s positive momentum could further be attributed to some technical buying following the previous day’s sustained breakthrough/closing above the 1.2600 mark. Hence, a subsequent move towards the very important 200-day SMA, around the 1.2695-1.2700 region, looks a distinct possibility.

Technical levels to watch