GBP/USD surges to fresh 1-week tops, around 1.2475 region
- GBP/USD catches some aggressive bids during the early European session on Tuesday.
- A sharp USD pullback turned out to be one of the key factors driving the pair higher.
- Technical buying above mid-1.2400s contributed to a sudden spike in the last hour.
The GBP/USD pair rallied around 70 pips during the early European session and shot to over one-week tops, around the 1.2470 region in the last hour.
Following an early dip to the 1.2400 round-figure mark, the pair caught some fresh bids near the 200-hour SMA and turned positive for the fifth consecutive session on Tuesday. The latest leg of a sudden spike over the past hour or so lacked any obvious fundamental catalyst and could be solely attributed a sharp intraday US dollar pullback.
The latest optimism over the easing of coronavirus-related restrictions globally and a push to accelerate the gradual re-opening of the economies seemed to have overshadowed a fresh rout in crude oil prices. This was evident from a turnaround in the global risk sentiment, which weighed on the greenback's relative safe-haven status.
This coupled with possibilities of some short-term trading stops being triggered on a sustained move beyond mid-1.2400s – 50% Fibonacci level of the 1.2648-1.2247 recent downfall – seemed to have accelerated the momentum. It will now be interesting to see if the momentum is backed by some genuine buying or turns out to be a stop run.
Meanwhile, increasing prospects of an extended lockdown in the UK, along with resurfacing concerns about hard-Brexit might take its toll on the sterling. This, in turn, might act as one of the key factors capping any further gains for the major amid persistent worries about the economic fallout from the coronavirus pandemic.
There isn't any major market-moving data due for release from the UK, while the US economic docket highlights the release of the Conference Board's Consumer Confidence Index. In the meantime, fresh developments surrounding the coronavirus saga and any Brexit-related updates might influence the pair and produce some short-term trading opportunities.
Technical levels to watch