GBP/USD clings to gains above mid-1.2900s, approaching multi-month tops
- The post-FOMC USD selling bias continued fueling the positive momentum.
- UK political uncertainty might hold back bulls from placing aggressive bets.
The GBP/USD pair gained some follow-through traction on Thursday and climbed further beyond mid-1.2900s, back closer to multi-month tops set last week.
Having shown some resilience near the 1.2800 handle earlier this week, the pair managed to regain traction and edged higher for the fourth consecutive session on Thursday. The incoming opinion polls indicated a majority for the UK Prime Minister Boris Johnson's Conservative Party at the upcoming election in December and turned out to be one of the key factors lending some support to the British Pound.
Persistent USD selling remains supportive
On the other hand, the US Dollar remained depressed on the back of Wednesday's less hawkish than expected FOMC statement. This coupled with a fresh leg of a freefall in the US Treasury bond yields, triggered by some renewed US-China trade pessimism, further dented the already weaker sentiment surrounding the Greenback and collaborated to the pair's ongoing positive momentum.
However, the fact that that the actual election outcome could be surprising, investors might refrain from placing any aggressive bullish bets, rather keep a lid on any runaway rally for the major. Hence, it will be prudent to wait for a sustained move beyond the key 1.30 psychological mark before traders start positioning for any further near-term appreciating move, possibly towards the 1.3100 handle.
Meanwhile, Thursday’s US economic data – core PCE price index, personal income/spending data and the usual initial weekly jobless claims – did little to provide any respite to USD bulls or provide any meaningful impetus to the major.
Technical levels to watch