- Renewed hopes for a possible last-minute Brexit deal help GBP / USD regain traction on Tuesday.
- Hopes for the COVID-19 vaccine and expectations of more US stimulus weigh on the USD and remain supportive for the pair.
- Mixed UK employment data does little to influence or provide a significant boost to the pair.
The pair GBP/USD moves slightly higher at the start of the European session on Tuesday, just below the 1.3350 region, and has had a fairly moderate reaction to the UK macroeconomic data release.
Following the previous day’s sharp pullback of around 140 pips, the pair has managed to regain positive traction on Tuesday and has remained supported by hopes of a last minute Brexit deal. It’s worth remembering that the UK and the European Union agreed to extend Brexit negotiations beyond Sunday’s deadline. In addition to optimism, the EU’s main Brexit negotiator Michel Barnier said on Monday that could reach a Brexit deal if a fisheries solution is found.
Meanwhile, the US dollar has remained weak near two and a half year lows amid recent buzz about the launch of vaccines for the coronavirus. This, along with the expectations of Additional US Fiscal Stimulus Measures, has put additional downward pressure on the USD and has continued to support the positive move for the GBP / USD pair.
When it comes to economic data, UK monthly employment details have shown that the number of people claiming unemployment benefits rose to 64,300 in November. The disappointment, to a large extent, has been offset by better-than-expected unemployment rates, rising to 4.9% versus estimates pointing to a 5.1% increase from the previous 4.8%.
However, the report has done little to provide significant momentum, as the focus remains on the events around the Brexit saga. That being said, the imposition of tighter restrictions in London and the discovery of a new variant of the coronavirus could prevent sterling bulls from opening aggressive positions. This, in turn, could limit the strong gains of the GBP / USD pair.
GBP / USD technical levels
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