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GBP / USD rises near 1,300 amid USD weakness

  • A renewed sell around the USD triggers a short hedging move in GBP / USD on Tuesday.
  • The uncertain political situation in the United States is considered a key factor weighing on the USD.
  • Risk appetite sentiment weighs on the safe-haven USD and supports the pair’s upward move.

The USD’s intraday selling bias has accelerated at the start of the European session, leading GBP / USD to daily highs around the 1.3000 region. At the time of writing, the pair remains in the high zone but remains limited below the important round level.

The pair has built on the previous day’s bounce, from the 1.2855 region at two-week lows, and gained strong continuation traction during the first half of Tuesday’s trading action. As investors have moved away from imposing the second nationwide lockdown in the UK, the emergence of some new sales around the US dollar has been considered a key factor which has propelled the GBP / USD pair higher.

Investors now seem inclined to undo its bullish USD positions amid growing mistrust of the actual election outcome presidential elections on Tuesday. Further, optimistic market sentiment, despite concerns about the economic consequences of coronavirus-induced restrictions, has further affected the US dollar safe haven.

Meanwhile, the continuation of the Brexit talks it has been seen as a sign that both the EU and the UK continue to push for a new deal before the end of the transition period. The reactivation of Hopes for a last minute Brexit deal it has provided additional boost to the British pound and continues to support the strong positive intraday movement of the GBP / USD pair.

Apart from this, the latest strong upward movement during the European session could be attributed to some technical buying on a sustained move above the previous day’s highs around the 1.2940 region. Momentum has now pushed GBP / USD above a short-term bearish channel, while the rally is likely to remain limited ahead of today’s key event – the US election.

Credits: Forex Street

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