GBP/USD surges to 1.2700 handle, over 1-week tops
• Investors looked past the latest UK political developments/Brexit uncertainties.
• The prevalent USD selling bias helped catch some aggressive bids on Tuesday.
The USD remained heavily offered on Tuesday, with the GBP/USD pair momentarily pushing through the 1.2700 handle, or over one-week tops in the last hour.
Despite the latest UK political development, the pair managed to catch some aggressive bids on Tuesday and was supported by the prevalent US Dollar selling bias. The opposition Labour Party leader, Jeremy Corbyn plans to bring a vote of no-confidence against the UK PM May, albeit did little to prompt any aggressive selling around the British Pound.
Meanwhile, the greenback continues to be weighed down by growing bets that concerns over the global growth outlook might prompt the Fed to signal a possible slowdown, or even a pause, to its rate hike cycle in 2019. The same was evident from the ongoing slide in the US Treasury bond yields and kept exerting downward pressure on the buck.
Broad-based USD selling helped the pair to continue gaining positive traction for the second consecutive session and build on Friday's late rebound from 1.2530 level. It would now be interesting to see if bulls are able to maintain their dominant position or the current bounce is once again utilized as a selling opportunity.
Moving ahead, today's US economic docket, featuring the second-tier release of housing market data, will now be looked upon for some short-term trading impetus. The key focus, however, will be on the latest FOMC monetary policy update on Wednesday, which will be looked upon for the central bank's near-term monetary policy outlook and eventually drive sentiment surrounding the greenback.
Technical levels to watch
Immediate resistance is pegged near the 1.2715-20 region, above which the pair is likely to aim towards challenging the 1.2780-85 supply zone. On the flip side, the 1.2660-55 region now seems to protect the immediate downside, which if broken might drag the pair back towards testing the 1.2600 handle.