GBP/USD spikes to 1-month tops, beyond 1.2760 barrier but lacks follow-through
- The prevailing USD selling bias continues to lend some support to the major.
- Absent negative Brexit headlines further underpin and remained supportive.
- No-deal Brexit fears seemed to be the only factor capping any strong gains.
The GBP/USD pair finally broke out of its Asian session consolidation phase and surged through the 1.2760 supply zone, hitting one-month tops in the last hour.
The pair remained well supported by the post-FOMC US Dollar bearish pressure, which showed no signs of receding on Tuesday in the wake of declining US Treasury bond yields. In fact, the yield on the benchmark 10-year government bond slipped back below the 2.0% mark and kept the USD bulls on the defensive, helping the pair to build on last week's solid rebound from the key 1.2500 psychological mark.
Meanwhile, absent negative Brexit-related headlines further held investors from placing any fresh bearish bets, rather extended some additional support to the British Pound and collaborated to the positive move. Adding to this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 1.2760 supply zone also seemed to be one of the key factors behind the latest leg of a sudden pickup in the last hour.
Hence, it would be prudent to see if the up-move is backed by any genuine buying or is just a stop run, which runs the risk of fizzling out rather quickly amid increasing fears of a no-deal Brexit. It is worth recalling that the favourite UK PM candidate Boris Johnson has already cleared his stance to leave the EU on October 31, with or without a deal and should keep a lid on any runaway rally for the major.
There isn't any major market-moving data due for release from the UK, while the US economic docket features the release of Conference Board's Consumer Confidence Index, Richmond Manufacturing Index and new home sales data, later during the early North-American session.
Investors on Tuesday will further take cues from scheduled speeches by influential FOMC members - including the Fed Chair Jerome Powell, which might further collaborate towards producing some meaningful trading opportunities and making it an eventful day for short-term traders.
Technical levels to watch