GBP/USD holds near daily highs, struggles to extend momentum beyond 1.30 handle

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GBP/USD holds near daily highs, struggles to extend momentum beyond 1.30 handle

  • Reflects GBP/USD GBP/USD Rapid decline to multi-day lows.
  • The rally seemed unaffected by the modest strength of the dollar.
  • Brexit uncertainty and Bank of England rate cut speculation cap gains.

The GBP/USD pair is located GBP/USD Currently near the upper end of its daily trading range, bulls are now looking to build on momentum beyond the key psychological level of 1.30.

The pair managed to find some support before mid-1.2900 areas and so far, it appears to have halted the rebound in UK retail sales data from levels above the 1.3100 round figure. The intraday recovery of around 40-50 pips had no obvious fundamental catalyst and seemed unaffected by the prevailing bullish sentiment surrounding the USD.

Upside likely to remain limited

The dollar remained well supported by the latest positive US economic data, which raised expectations that the US economy will continue to expand. In addition, the fading prospects of any further interest rate cuts by the Federal Reserve may continue to support the US dollar and limit any sharp rally in the pair amid relatively lighter trading conditions on the back of the US holiday.

Moreover, market fears of a no-deal Brexit at the end of this year may prevent investors from placing any strong bullish bets. This, combined with the strong expectations of a 25bp rate cut in the Bank of England at the upcoming monetary policy meeting on 30th Jan, may further contribute to determining the major pair's upside.

Thus, any subsequent recovery move may still be seen as a selling opportunity and risk fading quickly, which makes it wise to wait for some strong buying before traders start positioning for any further near-term bullish move.

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