GBP/USD moves above mid-1.2300s, closer to multi-week tops

• Growing Brexit optimism continues to underpin the British Pound.
• Tuesday’s upbeat UK jobs data extended some additional support.
• The USD underpinned by surging US bond yields and capped gains.

The GBP/USD pair seesawed between tepid gains/minor losses through the mid-European session on Tuesday and consolidated the recent strong up-move to multi-week tops.
 
After an initial uptick to the 1.2380 region – closer to the overnight swing high – the pair witnessed some intraday pullback and dropped to the 1.2300 neighbourhood. A slight deterioration in the global risk sentiment benefitted the US Dollar’s relative safe-haven status against its British counterpart and turned out to be one of the key factors that exerted some intraday downward pressure.

Brexit optimism/UK jobs data helped limit early downtick

The downtick, however, turned out to be short-lived, rather was quickly bought into amid growing optimism over a softer Brexit, especially after the UK lawmakers passed legislation to take control of the Brexit agenda and also voted against the PM Boris Johnson’s bid for an early election. The UK Parliament is now closed for five-weeks and will resume business on October 14.
 
The British Pound was further supported by Tuesday’s mostly upbeat US employment details, showing that the unemployment rate unexpectedly ticked lower to 3.8% from 3.9% previous, while the UK average weekly earnings including bonus bettered market expectations and rose 4.0% 3m/Yr in July – marking the highest level since 2008’s global financial crisis.
 
Meanwhile, the upside seemed limited, at least for the time being, amid a strong follow-through upsurge in the US Treasury bond yields, which seemed to extend some additional support to the intraday USD uptick amid absent relevant market moving economic releases from the US.

Technical levels to watch