During Thursday, the GBP/USD currency pair erased its early-day losses and rose to 1.2465 from the session low of 1.2404 while represented 0.14% gains in this session mainly due to the recent Brexit-positive signs triggered by the EU softening attitude over Brexit talks with the UK. At this moment, the GBP/USD is trading at 1.2430 and consolidating in the range between 1.2404 and 1.2465.
At the Brexit front, the report came from the Financial Times headline suggested that the European Union was showing a willingness to divert from the "level playing field" concept, which could help secure the Brexit talks, scheduled to happen next week. Afterward, the EU cleared that they aim to secure close alignment between the two sides' state-aid, environmental, and employment regulations. As well as, the report indicated that the European Union (EU) was afraid of being left "fighting for its survival" if the UK secure a strong trade deal at the end of the Brexit transition.
Besides, the City AM quotes the EU's chief negotiator Michel Barnier, who said that the European Union would keep compromising on the trade deal with Britain as long as the UK stopped stepping back from its commitments.
Apart from this, the currency pair gains were further bolstered by the latest optimism about the slight stability in the UK's COVID-19 cases. The positive vaccine test and easing of the lockdown restrictions also underpinned the British Pound and contributed to the currency pair gains.
Moreover, the reason for the risk-off market sentiment could also be attributed to the fresh geopolitical tension triggered by Trump's latest action to potentially impose fresh tariffs on $3.1 billion EU/UK goods. As in result, the European Union criticized the US and warned that the US tariffs of $3.1bn on European products would further harm the EU companies, which were already damaged from Covid-19; this eventually added strength to the risk-off market sentiment.
At the USD front, the broad-based US dollar extended its previous session gains and remained bullish, mainly due to concerns about the mounting coronavirus cases and the economic recovery's impact on promoting a return to the safe haven. However, the gains in the US dollar kept a lid on any additional gains in the GBP/USD currency pair. The market participants will now keep their eyes on the UK's reaction to the bloc's step forward and the trade-negative signals from the US to determine immediate pair moves. As well as the trade/virus updates could not lose their importance.
Daily Support and Resistance
Support Resistance
1.2375 1.2504
1.233 1.2588
1.2245 1.2633
Pivot Point 1.2459
Technically, the GBP/USD is trading below the pivot point, providing resistance around 1.2459 level today. Above this, the Cable is likely to face resistance at 1.2530; however, the real breakout will be if the GBP/USD pair breaks over 1.2530 level to lead the Cable towards 1.2670 level. Considering the 50 EMA resistance and intraday pivot point, the Cable has a strong chance of showing a bearish breakout, and if this happens, the Sterling will find immediate support at 1.2330 1.2235 level. Good luck!