GBP/USD looks to take on the recovery above 1.2850

Despite persisting risk-off trades, the GBP/USD pair extends its steady recovery mode into the European session, as the bulls find fresh impetus from renewed USD selling across the board.

GBP/USD unperturbed by latest UK election polls

The spot remains on track to take on its steady recovery mode above 1.2850 barrier, mainly driven by a short-covering rally, after the pound slumped to fresh four-week lows of 1.2776 against the greenback last Friday.

Cable tumbled sharply on Friday after various opinion polls on the UK election showed UK PM May’s Conservatives Party lead narrowing, which implies the Brexit deal at jeopardy.  The UK general elections are scheduled on June 8^th.

Meanwhile, the major remains strongly bid so far this session, as markets paid little heed to weekend’s polls results and Scotland’s first minister Sturgeon’s comments. Moreover, a retreat in the US dollar versus its main peers from near 5-day tops, also collaborates to the ongoing rebound in GBP/USD.

Looking ahead, focus now remains on the PMI reports lined up for release from the UK docket in the second-half of this week, while the major may extend the recovery further towards 5-DMA at 1.2874 amid holiday-thinned markets.

GBP/USD Levels to consider            

Slobodan Drvenica Windsor Brokers Ltd noted: “Current action could be seen as positioning for fresh easing with extended upticks seen on oversold slow stochastic on daily chart, expected to stay capped under converged 20/10 SMA's (1.2926/35 respectively). Bearish continuation requires close below Fibo 1.2786 support to open way for extension towards 55SMA (1.2694) and daily cloud top at 1.2656. Conversely, sustained break above 20/10SMA's would signal an end of corrective phase from 1.3047 (18 May peak).