- GBP/USD edged higher for the second consecutive session on Monday.
- The early uptick was sponsored by the emergence of fresh USD selling.
- The British pound got an additional boost from upbeat UK Services PMI.
The GBP/USD pair reversed an early European session dip and rallied around 65 pips to refresh daily tops, around the 1.2965 region in the last hour.
The pair attracted some dip-buying near the 1.2900 mark and moved back into the positive territory for the second consecutive session, also marking the fifth day of a move up in the previous six. As investors digested the latest Brexit-related developments, the emergence of some fresh selling around the US dollar extended some support to the GBP/USD pair.
It is worth reporting that the UK Prime Minister Boris Johnson will hold talks with the European Commission President Ursula von der Leyen agreed in a phone call on Saturday to step up negotiations on a post-Brexit deal. Given the lack of progress in the ninth round of Brexit negotiations, the efforts to close gaps extended some support to the British pound.
On the other hand, the positive news about the US President Donald Trump’s coronavirus infection boosted investors’ confidence and undermined the greenback’s relative safe-haven status. Doctors said that Trump has responded well and could return to the White House on Monday, easing political uncertainty that spooked investors and triggered the risk-off mood on Friday.
The sterling got an additional boost following the release of the UK Services PMI, which was finalized at 56.1 for September as against the 55.1 preliminary estimates. Despite the supporting factors, the GBP/USD pair lacked any strong follow-through buying and remained well below the key 1.3000 psychological mark, warranting some caution bullish traders.
This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move. Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data, along with the broader market risk sentiment will influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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