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GBP/USD gains traction on latest Brexit headlines, pushes above 1.29

  • Report says ERG to vote in favour of PM May's deal.
  • GBP/USD spikes to fresh 2-month highs above 1.29.
  • US Dollar Index stays around 95.60.

The GBP/USD pair surged higher in the last hour after a highly respected ITV reporter said that the European Research Group (ERG) Brexiters would vote in favour of Prime Minister Theresa May's deal. After touching its highest level since mid-November at 1.2930 with the knee-jerk reaction, the pair retreated slightly and was last seen trading at 1.2890, adding 0.4% on a daily basis.

"Influential Tory Brexiter MP tells me he and his ERG Brexiter colleagues "will be voting with Theresa May and the government all day tomorrow" unless Hilary Benn withdraws his amendment that would rule out a no-deal Brexit," ITV's Robert Peston said via Twitter, reviving hopes of PM May's deal passing through the Parliament and providing a boost to the British pound.

Earlier today, PM May said that her government was able to secure valuable assurances from the EU on the Iris backstop to give the initial leg up to the pair and is expected to announce them before tomorrow's vote. 

On the other hand, the greenback was able to stay relatively resilient with the US Dollar Index staying in its tight daily range a little below the 95.60 mark and making it difficult for the pair to extend its rally.

Technical levels to consider

Above 1.2930 (daily high), 1.2990/1.3000 area (200-DMA/psychological level) stays as the next critical resistance for the pair ahead of 1.3050 (Nov. 13, 2018, high). On the downside, supports are located at 1.2820 (daily low), 1.2730 (20-DMA) and 1.2700 (Jan.8/Jan. 11 low).

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