GBP/USD refreshes weekly tops and eases, comfortable above 1.2900 mark
- GBP/USD continues gaining traction for the third consecutive session on Thursday.
- A fresh leg down in the US bond yields undermined the USD and remained supportive.
The greenback witnessed some fresh selling on Thursday and lifted the GBP/USD pair to fresh weekly tops, around the 1.2930 region in the last hour.
Following a brief consolidation through the early part of Thursday's trading action, the pair regained traction for the third consecutive session and built on its goodish recovery move from YTD lows set last Friday.
GBP/USD supported by a combination of factors
The positive move was sponsored by sustained US dollar selling bias, which picked up some additional pace since the early European session amid the ongoing downfall in the US Treasury bond yields to record lows.
A turnaround in the global risk sentiment – as depicted by a fall of around 1.5% in the US equity futures – dragged the yield on the benchmark 10-year US government bond back below the key 1.0 psychological mark.
Adding to this, increasing odds for another 50 bps rate cut by the Fed – at its upcoming FOMC meeting on March 18 – further aggravated the USD bearish pressure and provided an additional boost to the major.
On the other hand, the British pound was supported by the fact that the incoming BoE Governor Andrew Bailey dampened prospects for an immediate rate cut during his testimony before the UK's Treasury Committee on Wednesday.
It is worth recalling that Bailey –though showed readiness to act quickly – said that he would wait for more evidence before deciding on a move rather than rushing to an emergency cut, which remained supportive of the GBP strength.
Meanwhile, possibilities of some short-term trading stops being triggered on a sustained move beyond the 1.2900 round-figure mark could also be attributed to the pair’s latest leg of a sudden spike over the past hour or so.
It, however, remains to be seen if the pair is able to capitalize on the momentum or meets with some fresh supply at higher levels amid persistent uncertainty about the future UK-EU trade relationships and fears of a no-deal Brexit.
Technical levels to watch