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GBP / USD jumps to daily highs around 1.2980 region amid weaker USD

  • GBP / USD turns positive for the second day in a row amid a renewed selloff of the USD.
  • Doubts about additional US fiscal stimulus measures weigh on the USD.
  • The uncertainties of Brexit could limit any uncontrolled movement of the British pound.

The pair GBP / USD has recovered more than 60 pips from the lows of the European session and has risen to new daily highs, around the 1.2980 region in the last hour.

Following the previous day’s retracement of around 85 pips and an initial decline to the 1.2920 region, the pair has managed to regain traction and turned positive for the second day in a row on Tuesday. The rebound is due to the emergence of new sales around the US dollar.

The investors They don’t seem convinced that US lawmakers can agree on a stimulus package before Tuesday’s deadline. This, in turn, has kept USD bulls on the defensive and it has been seen as one of the key factors that has offered some support to the GBP / USD pair.

The British pound received additional support from the previous day’s comments from the EU’s chief Brexit negotiator, Michel Barnier, confirming that the EU remains available to intensify the Brexit negotiations. It’s worth remembering that trade talks between the UK and the EU had stalled amid disagreements over access to fishing and skills issues.

Meanwhile, the UK Brexit negotiator, Michel Frost said on Monday that there is no point in resuming talks. Furthermore, the UK Brexit Minister, Michale Gove said the UK is ready for an “Australian-style” outing of the Union. Conflicting comments have added to the Brexit uncertainties and could limit strong gains for GBP / USD.

There is no release of major UK economic data on Tuesday. Therefore, Brexit related news will continue to play a key role in boosting sentiment around the GBP. Meanwhile, the US economic calendar features second-tier posts like building permits and home starts.

The data, along with broader market risk sentiment, developments around the US fiscal stimulus and the coronavirus saga, could influence USD price dynamics and generate some significant trading opportunities.

Credits: Forex Street

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