- GBP/USD up, after the weak trading yesterday.
- US dollar is in a heavily offered tone.
- Technicals have to align before placing aggressive directional bets in the pair.
The GBP/USD bulls are trying to push the pair above the technically significant 1.3100 levels.
The Cable had witnessed good selling in the earlier two days of trading. Still, it showed strength today to recover from the psychologically valid 1.3000; also the recent week-plus lows, set yesterday.
The weakness in dollar triggered the bounce back in the pound-dollar pair, as a result of the stimulus impasse in Washington.
The fall in yield in the US Treasury bonds, after a record 38 billion dollar issue, also dragged the greenback.
The risk-on mood from the news of a potential vaccine against the coronavirus, exemplified by the equity rally, helped the pound to gain at the expense of the dollar.
The run-up in the pair lacked any other fundamental catalysts other than the dollar weakness, and thus has the risk of fading fast. The US policymakers are expected to reach a deal sometime shortly, not if this week; this will put a cap on any further gains for the GBP/USD.
On a technical perspective, the pair has been oscillating in a broad trading range since the start of August. Hence, traders might wait to see further follow-through buying before involving aggressively on the long side. Also, a break below 1.3000 with strength is required for bears to act with conviction.
The US session will have the US Initial Weekly Jobless Claim to watch out for meaningful trading opportunities in the pair.