GBP/USD surges through 1.2900 handle amid the latest Brexit optimism

   “¢   The incoming positive Brexit headlines prompt some aggressive short-covering.
   “¢   The USD retreats from 17-month tops and remain supportive of the positive move.
   “¢   Brexit optimism likely to overshadow today’s UK PMI and BoE policy update.

The GBP/USD pair finally broke out of its late Asian session consolidation phase and surged through the 1.2900 handle, over one-week tops, in the last hour.

The pair built on previous session’s goodish rebound from sub-1.2700 level, or 2-1/2 month lows, and continued gaining strong positive traction for the second consecutive session amid the latest Brexit optimism.

According to a Bloomberg report, the UK Brexit Secretary Dominic Raab, in a letter to the House of Commons Brexit Committee dated Oct. 24, said that he expected to finalize a deal with the European Union by Nov. 21.

Meanwhile, the UK Times newspaper reported this Thursday that the UK PM Theresa May has struck a tentative deal with the EU that would give financial services companies in the UK continued access to European markets after Brexit.

The news was further reaffirmed by a Reuters’ report, which quoted an unnamed UK official saying that financial services deal may be expected if the overall Brexit deal is agreed this month and would be based on the EU’s existing so-called equivalence system.  

The incoming positive Brexit news prompted some aggressive short-covering move on Thursday, which coupled with a sharp US Dollar retracement from 17-month tops remained supportive of the pair’s strong momentum through the early European session.

With Brexit headlines turning out to be an exclusive driver of the pair’s ongoing rally, today’s release of the UK manufacturing PMI and the latest BoE monetary policy updated, along with the release of quarterly inflation report (QIR) might turn out to be a rather non-event.

Technical levels to watch

Immediate resistance is pegged near the 1.2925-30 region and is closely followed by the 1.2955-60 zone, above which the pair seems all set to aim towards reclaiming the key 1.30 psychological mark. On the flip side, any meaningful retracement back below the 1.2900 handle now seems to find immediate strong support near the 1.2845 region, which if broken might negate the bullish outlook and trigger a fresh leg of a downside back towards the 1.2800 round figure mark.