GBP/USD eases from tops, still well bid near 1.2500 mark

The GBP/USD pair trimmed a part of its early gains to over one-week tops, albeit has still managed to hold in the positive territory, around the key 1  |  02/07/2020 15:00
  • GBP/USD witnessed a modest intraday pullback in the wake of incoming Brexit headlines.
  • The risk-on mood continued undermining the safe-haven USD and helped limit the slide.
  • The set-up still favours bulls and supports prospects for a move toward the 1.2600 mark.

The GBP/USD pair trimmed a part of its early gains to over one-week tops, albeit has still managed to hold in the positive territory, around the key 1.2500 psychological mark.

The pair built on this week's goodish recovery move from mid-1.2200s and continued gaining traction through the first half of trading action on Thursday. The positive momentum was sponsored some follow-through selling around the US dollar.

The latest optimism over the positive results from the early-stage human trials of a potential Covid-19 vaccine remained supportive of the upbeat market mood. This, in turn, was seen as one of the key factors undermining demand for the safe-haven greenback.

The global risk sentiment got an additional boost following the release of stellar US monthly jobs report (NFP). The data provided further evidence that the worse of coronavirus was probably over and revived hopes of a sharp V-shaped global economic recovery.

Meanwhile, the risk-on flow led to a strong intraday pickup in the US Treasury bond yields, which helped the USD to bounce off daily lows. This coupled with persistent Brexit uncertainties capped the GBP/USD pair, rather prompted some intraday profit-taking.

In the latest Brexit-related headlines, the UK and EU negotiations failed to make any substantial breakthrough on a number of important issues. The EU’s chief Brexit negotiator Michel Barnier also claimed that there are still serious gaps between the bloc and Britain.

The intraday pullback lacked any strong follow-through selling, suggesting that the near-term bullish trend might still far from being over. Hence, some follow-through strength beyond the 1.2540-45 intermediate resistance, towards reclaiming the 1.2600 mark, remains a distinct possibility.

Technical levels to watch

 

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