GBP/USD clings to gains near daily tops, eyeing 1.2500 handle
- The UK Supreme Court ruled that Johnson acted unlawfully when he suspended Parliament.
- The development further raised expectations of a softer Brexit and provided a goodish lift.
- Retracing US bond yields undermined the USD and remained supportive of the positive move.
The GBP/USD pair maintained its strong bid tone through the early North-American session, with bulls now eyeing a move beyond the key 1.2500 psychological mark.
After the recent corrective slide from over two-month tops set last week, the pair caught some fresh bids on Tuesday and snapped two consecutive days of losing streak in reaction to the UK Supreme Court's ruling against the government. The decision stated that the UK PM Boris Johnson acted unlawfully when he suspended the Parliament just weeks before Brexit and that the prolonged prorogation was without reasonable justification.
Boosted by fresh Brexit optimism
This was followed by speaker of the lower house - John Bercow’s announcement that he instructed authorities to prepare the resumption of business of the House of Commons and announced that the House will sit on Wednesday at 11:30 AM. This gives the UK lawmakers up to two weeks of extra time on hands to prevent a no-deal Brexit, which provided an additional boost to the British Pound and lifted the pair back closer to the 1.2500 handle.
On the other hand, the US Dollar failed to capitalize on its early uptick amid a modest pullback in the US Treasury bond yields and remained supportive of the bullish mood surrounding the major. However, given that there are still big differences between the UK and the EU on Brexit, investors might refrain from placing any aggressive bullish bet and should eventually keep a lid on any strong follow-through up-move for the major.
With the incoming UK political/Brexit-related headlines turning out to be an exclusive driver of the pair's momentum, market participants now look forward to the US economic docket - highlighting the release of Conference Board's Consumer Confidence Index - in order to grab some short-term trading opportunities.
Technical levels to watch