GBP/USD clings to gains near 2-day highs around 1.2950 level

The pair GBP/USD moved to the upside at the beginning of the European session on Thursday, staying near-daily highs around 1.2950 level.

The pair had built on the good bounce the day before, around 85 pips from weekly lows. It gained some traction for the second day in a row on Thursday. In the absence of negative Brexit news, a softer tone around the US dollar has been seen as one of the critical factors that have propelled the GBP/USD higher.

As shown by a positive tone in the stock markets, the prevailing optimistic sentiment in the market has weighed on the safe-haven US dollar against the British pound. Renewed optimism about additional fiscal stimulus measures in the US has helped offset concerns about rising COVID-19 cases and boosted investor confidence.

The bulls are likely to refrain from opening aggressive positions

Hopes for additional stimulus have been revived after US President Donald Trump said Wednesday that he was ready for gradual spending measures, including supporting individuals, small businesses, and airlines. This comes after Trump suddenly suspended talks with Democrats about the latest stimulus measures and changed market sentiment earlier this week.

The positive move does not appear to be affected by lingering Brexit-related uncertainties. 

Irish Foreign Minister Simon Coveney said that the EU’s chief Brexit negotiator Michel Barnier would not seek an intensification of negotiations unless the UK changes its stance on the state aid. Coveney also added that it is difficult to imagine an area for fishing.

Given that significant differences remain between the UK and the EU on the post-Brexit trade deal, the bulls are likely to refrain from opening aggressive positions. This, in turn, could limit any further gains from the GBP/USD pair, so it is prudent to wait for some solid continuation buying to take place before positioning for any short-term upside above the critical psychological level of 1.3000.