GBP / USD rallies back toward 1.3000, focus remains on Brexit headlines

• GBP / USD witnessed an aggressive short-hedging move on Monday amid renewed Brexit optimism.
• Risk appetite undermined the safe-haven dollar and continued to support the strong bullish move.
• The key focus on Monday will be on the Barnier-Frost meeting and Fed Chairman Jerome Powell’s speech.

The pair GBP/USD it continued to rise during the first half of the European trading session, and the bulls are now looking to take advantage of the momentum above the key psychological level 1.3000.

The British pound turned out to be the best performing currency on the first day of a new week and was supported by upbeat comments from UK Brexit Minister Michale Gove. In a weekend interview with the BBC, Gove said the door is “still ajar” for post-Brexit talks to continue with the European Union if officials from the bloc change positions on key points.

This comes in the wake of British Prime Minister Boris Johnson’s comments on Friday saying Britain must prepare for an Australia-style Brexit. It’s worth remembering that negotiations between the UK and the EU have stalled amid disagreements over access to fisheries and competition issues. Gove’s remarks, however, offered a ray of hope and prompted an aggressive short hedge around the British pound.

On the other hand, the prevailing risk appetite affected the relative safe-haven status of the US dollar and continued to support the strong supply tone surrounding GBP / USD. Global risk sentiment got a strong boost as hopes for additional US fiscal stimulus measures revived and expectations for a vaccine for the highly contagious coronavirus diseases by the end of this year.

In the absence of major market-moving economic releases, be it from the UK or the US, the incoming Brexit-related headlines will continue to drive sentiment around the British pound. Therefore, the key focus will be on a meeting between the EU’s chief negotiator, Michel Barnier, and his UK counterpart, David Frost.

Later, during the early days of the American session, a scheduled speech by Fed Chairman Jerome Powell could influence USD price dynamics and further help traders seize some significant opportunities.