After subdued trading action on the first day of a new trading week, the GBP/USD pair regained some positive traction on Tuesday amid persistent US Dollar selling bias. Prospects of monetary easing by the Fed continued exerting some downward pressure on the greenback, which coupled with absent negative Brexit headline provided a modest boost to the major.
The pair finally made it through the 1.2760 supply zone and climbed to one-month tops, although increasing fears of a no-deal Brexit kept a lid on any strong follow-through up-move. The fact that hardline Brexiteer Boris Johnson remains the favourite candidate to be Britain's next Prime Minister has caused bullish traders remained on the sidelines, seemingly reluctant to place any aggressive bets.
Speaking to LBC radio this Tuesday, Johnson reiterated his intent to leave the EU by October 31 and said that the Brexit deal is basically dead, though he plans to keep only some parts of the existing agreement. The UK PM candidate further added that Britain could agree with the EU to go forward together on a GATT 24 basis, and it would be bizarre if the EU decides to impose tariffs on UK goods.
In absence of any major market moving economic releases from the UK, it would be interesting to see if the pair is able to capitalize on the positive move or once again meets with some fresh supply at higher levels. Later during the early North-American session, the US economic docket - featuring the release of Conference Board's Consumer Confidence Index, Richmond Manufacturing Index and new home sales data - will be looked upon for some short-term impetus.
This coupled with speeches by influential FOMC members - including the Fed Chair Jerome Powell, along with any incoming Brexit-related headlines might further collaborate towards making it yet another eventful day for short-term traders.
From a technical perspective, the pair's ability to find acceptance above 200-period SMA on the 4-hourly chart for the first time since early-May, coupled with the attempted move beyond the 1.2760 supply zone, points to lack of fresh selling. The mentioned hurdle coincides with the 38.2% Fibonacci level of the 1.3177-1.2506 recent slide and should act as a key pivot point for the pair's next leg of a directional move. Follow-through buying now seems to pave the way for a move towards reclaiming the 1.2800 round figure mark en-route 50% Fibonacci resistance near the 1.2840 region.
On the flip side, any meaningful pullback might continue to find some support near the 1.2730-25 region (200-period SMA), below which the pair is likely to break below the 1.2700 handle and test 1.2675-70 support area. Failure to defend the mentioned support might negate any near-term bullish bias and turn the pair vulnerable to resume its prior well-established bearish trend.
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