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  • A modest USD pullback helps regain traction in absence of any negative Brexit headlines.
  • Short-covering above 1.2200 handle further accelerates the intraday positive momentum.

The GBP/USD spiked to fresh session tops in the last hour, with bulls now looking to extend the momentum further beyond the 1.2200 round figure mark.

Despite rising odds of a no-deal Brexit, the British Pound managed to regain some positive traction on Wednesday and assisted the pair to build on the overnight rebound from the vicinity of the 1.2100 handle or fresh 28-month lows.

A modest US Dollar pullback from two-month tops, amid some repositioning trade ahead of Wednesday’s highly anticipated FOMC monetary policy decision, seemed to be one of the key factors behind the pair’s intraday short-covering move.

Heading into Wednesday’s key event risk, the release of slightly better-than-expected ADP report on the US private sector employment details passed largely unnoticed and did little to provide any meaningful impetus to the major.

Meanwhile, the latest leg of a sudden pickup of around 25-30 pips over the past hour or so was further fueled by some near-term trading stops being triggered on a sustained move beyond the 1.2185-90 horizontal resistance.  

Hence, it will be prudent to wait for a strong follow-through buying to see if the up-move is backed by any genuine buying or is just a stop run, which runs the risk of fizzling out rather quickly amid persistent Brexit uncertainties.

Technical levels to watch