• Recovers a major part of Friday’s steep losses.
• Renewed USD selling bias turns out to be a key driver.
• A follow-through momentum needed for bullish confirmation.
The GBP/USD pair staged a solid recovery and jumped back to the 1.3400 handle, recovering around 100-pips from 2-1/2 week lows touched on Friday.
Despite the latest progress over the long-awaited tax cut legislation, a fresh wave of US Dollar selling pressure emerged at the start of a new trading week and has been one of the key factors driving the pair higher.
The British Pound got an additional boost from today's better-than-expected UK CBI Industrial Order Expectations for December, which further collaborated to the pair's strong up-move through the early NA session.
Meanwhile, possibilities of some short-term trading stops being triggered, on a decisive move break through 1.3360 hurdle, might have also collaborated to the pair's upsurge over the past hour or so. Hence, it would prudent to wait for a follow-through buying interest before confirming that the pair has found a firm base near the 1.3300 handle.
In absence of any major market moving economic releases from the US, an extension of the pair's upward trajectory, amid persistent USD weakness, now seems a distinct possibility.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes: "The short-term technical stance is neutral, as technical indicators remain within negative territory with limited directional strength, while the price remains below its 20 SMA, which also lacks momentum. The pair has an immediate support at 1.3345, followed by the 1.3300 level, with a break below this last required to see the pair gaining bearish momentum. The potential of a bullish extension is being limited by the 1.3465 level, a probable top for today, should the greenback remain under pressure."
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