GBP/USD rallies to 5-month high as bulls lean on Brexit extension bets

• GBP/USD trades near 1.3255 during early Wednesday.
• The pair recently rallied to 5-month high on delayed Brexit hopes.
• 1.3365 is likely nearby resistance while 1.3200 may act as immediate support.

GBP/USD trades around 1.3255 as traders look to handover to the early Asian session on Wednesday. The pair surged to the five-month high near 1.3290 during Tuesday as the UK PM Theresa May’s parliament appearance challenged concerns about a no-deal Brexit. Adding to the momentum strength were opposition Labour party’s readiness to bring the second referendum on the table and the BoE officials’ inflation report hearings. At the US, lack of clear signals from the Fed Chair’s testimony and mixed economics confined the US Dollar strength.

During Tuesday, PM May appeared in the British parliament and said she hasn’t discussed Brexit delay with the EU officials. However, her timetable signaled a vote to extend Article 50 on March 14 if members of the parliament (MPs) reject her fresh plan on March 12 and also turn down no deal Brexit on March 13.

The said extension to Article 50, even if indicated as a short one till June, pleased the British Pound (GBP) buyers at the time when opposition also showed readiness to put forward a motion proposing the second referendum on Brexit as soon as Wednesday. It should also be noted that the Bank of England (BoE) officials praised marked liquidity and refrained from being passive.

On the other hand, Federal Reserve Chairman Jerome Powell presented his semi-annual testimony before the Senate Banking Committee on Tuesday. As expected, Powell repeated his recent behavior of speaking well for the economic conditions without giving much information about future policy moves. There were few data like the US housing starts and consumer confidence that grabbed marked attention. The housing starts plunged to the lowest since August 2016 during January month whereas consumer confidence improved during the present month.

GBP/USD Technical Analysis

The GBP/USD pair needs to surpass September 2018 high around 1.3300 in order to aim for 1.3365 and 1.3400 resistances.

Should there be a drag in holding present strength, 1.3200 and 1.3110 are likely nearby supports to take care.