GBP/USD flirts with 1.2700 amid oil recovery & UK political woes

The GBP/USD pair is seen struggling hard to extend gains beyond Thursday’s highs reached at 1.2712 levels, as the bulls remain cautious amid ongoing UK political turmoil.

GBP/USD en route 1.2800?

The spot consolidates the Asian recovery from 1.2675 region, fuelled by renewed optimism over the Brexit issue, after the UK PM Theresa May outlined her offer on the EU citizens’ rights post-Brexit. May’s plan was apparently well received by some of the EU leaders.

Moreover, oil prices are seen attempting a tepid recovery, which resulted in a better risk environment across the markets, underpinning the sentiment around the higher-yielding currency GBP.

Despite, the ongoing recovery, GBP/USD remains exposed to downside risks, in the wake of looming political uncertainties over May’s Conservatives Party’s deal with the Democratic Unionist Party (DUP), as revealed by the latest reports, citing that the members of the Democratic Unionist Party in Ireland refused to answer May's calls for 36 hours.

Moreover, markets believe that the ongoing oil-price recovery will steepen the Treasury yield curve, which will boost the US dollar broadly, in turn pushing cable lower.

Meanwhile, markets look past hawkish comments from BOE members Haldane and Forbes, as focus shifts to the US fundamentals including the manufacturing PMI and new home sales data due later in the NA session.

GBP/USD levels to consider             

Omkar Godbole, Analyst at FXStreet offers key technical levels for the spot. “Immediate support is seen at 1.2675 (Asian session low), which, if breached, would open doors for 1.2633 (100-DMA) and 1.2589 (June 21 low). On the higher side, breach of resistance at 1.27 (zero levels) would open up upside towards 1.2755 (Apr 21 low) and 1.2769 (May 31 low).“