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GBP/USD refreshes session tops on stronger UK earnings growth data

   •  Coveney’s comments prompt some short-covering bounce on Tuesday.
   •  The up-move gets an additional boost from upbeat UK wage growth data.

The GBP/USD pair built on its intraday positive momentum further beyond the 1.2600 handle and refreshed session tops on upbeat UK labor market report.

The British Pound was shaken by the latest Brexit drama and tumbled across the board after the UK PM Theresa May called off a highly anticipated Brexit parliamentary vote. The development added an element of chaos to already uncertain situations and resulted into a 250-pips intraday selloff in the major.

The selling pressure abated ahead of the key 1.2500 psychological mark, with some positive comments by Irish foreign minister Simon Coveney prompting some short-covering bounce and helping the pair to stage a solid rebound since the early European session on Tuesday.

The positive momentum got an additional boost following the release of stronger than expected UK average earnings growth, which partly offset a larger than expected rise in the number of people claiming unemployment-related benefits in November.

The pair touched an intraday high level of 1.2638 but seemed lacking any strong follow-through as investors preferred to wait and see if the UK PM Theresa May is able to secure legal assurance to fix an end-date to the backstop as she holds emergency talks with the EU officials later today.

Technical levels to watch

Immediate resistance is pegged near the 1.2655-60 region, above which the pair is likely to aim towards reclaiming the 1.2700 round figure mark. On the flip side, the 1.2600-1.2580 region now seems to protect the immediate downside, which if broken might trigger some fresh weakness and accelerate the slide further towards the 1.2535 intermediate support en-route the 1.2500 handle.

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