GBP/USD refreshes session tops, looks to extend momentum beyond 1.3700 mark

• Renewed USD selling bias assisted GBP/USD to regain positive traction on Tuesday.
• The prevalent upbeat market mood was seen weighing on the safe-haven greenback.
• The upside seems limited as the focus remains on the BoE policy meeting on Thursday.

The GBP/USD pair refreshed daily tops during the early European session, with bulls making a fresh attempt to build on the momentum beyond the 1.3700 mark.

The pair stalled the previous day’s retracement slide from the 1.3755-60 supply zone, or multi-year tops and attracted some dip-buying ahead of mid-1.3600s on Tuesday. The upbeat market mood prompted some fresh selling around the safe-haven US dollar, which, in turn, was seen as a key factor driving the GBP/USD pair higher.

Investors turned optimistic about a strong global economic recovery amid firming expectations for a massive US fiscal stimulus measures, especially after Democrat lawmakers on Monday filed the $1.9 trillion budget measure. The move was seen as a step toward bypassing Republicans and get it passed in the US Congress.

Apart from this, diminishing odds for any BoE rate cut in 2021 benefitted the British pound and provided an additional lift to the GBP/USD pair. In fact, UK money markets indicated that investors have pushed back bets for 10bps interest rate cut by the BoE to 2022 vs the previous expectations for such a move in December.

Hence, the key focus will remain on the upcoming BoE meeting on Thursday. In the meantime, the GBP/USD pair is more likely to remain well within a two-week-old trading range amid absent market-moving economic data. That said, developments surrounding the coronavirus saga might infuse some volatility and produce some trading opportunities.

Technical levels to watch