GBP/USD clings to gains near two-day tops, around mid-1.2900s

• GBP/USD gained traction for the second consecutive session on Thursday.
• The risk-on mood undermined the safe-haven USD and remained supportive.
• The positive move seemed rather unaffected by persistent Brexit uncertainties.

The GBP/USD pair edged higher through the early European session and refreshed daily tops, just above mid-1.2900s in the last hour.

The pair built on the previous day's goodish rebound of around 85 pips from weekly lows and gained some follow-through traction for the second consecutive session on Thursday. In the absence of any negative Brexit-related headlines, a softer tone surrounding the US dollar was seen as one of the key factors driving the GBP/USD pair higher.

The prevalent upbeat market mood – as depicted by a positive trading sentiment around the equity markets – undermined the greenback's relative safe-haven status against its British counterpart. Renewed optimism over the US fiscal stimulus measures helped offset concerns about the ever-increasing COVID-19 cases and boosted investors' confidence.

Hopes for additional stimulus were restored after the US President Donald Trump on Wednesday said that he was ready for gradual spending measures, including support for individuals, small businesses and airlines. This comes after Trump abruptly called off talks with Democrats over the latest stimulus measures and changed the market sentiment.

The positive move seemed rather unaffected by persistent Brexit-related uncertainties. It is worth recalling that Irish Foreign Minister Simon Coveney said on Wednesday that the EU Chief Brexit Negotiator Michel Barnier will not agree on intensified negotiations unless the UK moves its stance on state aid. Coveney also added that level playing field is a really serious issue and added that a landing zone on fishing is hard to envisage.

Given that significant gaps remain between the UK and the EU on the post-Brexit trade deal, bulls are likely to refrain from aggressive bets. This, in turn, might keep a lid on any further gains, making it prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move beyond the key 1.3000 psychological mark.

Technical levels to watch