- GBP / USD gained strong follow-up traction for the second straight session on Wednesday.
- The prevailing risk appetite undermined the safe-haven dollar and continued to act supportive.
- Investors are now awaiting the UK Parliament’s vote on the Brexit trade deal amid reduced transaction volume.
The pair GBP/USD it maintained its strong bidding tone through the middle of the European session, although it seemed to be struggling to capitalize on momentum above 1.3600.
The pair added to the positive movement of the previous day and continued to climb higher for the second consecutive session on Wednesday. The momentum was sponsored by the strongly offered tone around the US dollar, which fell to fresh multi-year lows amid prevailing risk appetite.
Investors ignored the effective rejection of the move to increase direct payments to $ 2,000 and seemed convinced of the likelihood of additional financial assistance. This, coupled with hopes for a strong global economic recovery in 2021, continued to support market optimism.
Aside from this, the news that UK regulators approved the use of the AstraZeneca / Oxford coronavirus vaccine provided an additional boost to already strong global risk sentiment. This, in turn, undermined the USD’s relative safe-haven status vis-Ã -vis its British counterpart.
However, market participants remain concerned about the exclusion of the crucial service sector in the Brexit deal. Apart from this, a sharp increase in cases infected by the new coronavirus strain in the UK prevented the bulls from making any new bets and could limit the rise for the GBP / USD pair.
The key focus on Wednesday will be on the UK Parliament’s vote on legislation to enact the government’s trade deal with the European Union. In rapid advance of normal lawmaking procedures, the government will get the EU bill (future relationship) through the Commons and Lords in just one day.
Meanwhile, the US economic agenda, which includes second-tier releases of the goods trade balance, Chicago PMI and pending home sales, is unlikely to provide any significant boost. This leaves the GBP / USD at the mercy of broader market risk sentiment and USD price dynamics.
Technical levels
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