GBP/USD still comfortable above 1.2850

GBP/USD gained tracking traction for the second straight session yesterday and rebounded from the seven-week lows. Despite its quick retreat of around 50-60 pips earlier in the day, the pair still managed to hold on daily gains around the 1.2880-1.2885 area. 

GBP/USD has experienced a positive momentum supported by robust intraday selling around the USD. It was a result of an upbeat announcement about UK job details. However, mounting fears of not reaching a Brexit deal limited gains of the modest rally in the US dollar from lows. 

The latest optimism about a coronavirus vaccine supports market optimism. As a consequence, sentiment has been bullish in the global equity markets. It undermined the safe-haven status of the USD and kept supporting GBP strongly. 

According to British macroeconomic data, the number of people requiring unemployment benefits totaled 71,700, which is 26,300 less than expected. Still, the unemployment rate increased by 4.1% for the three months through July. It was a raise from 3.9%.

In the United States, the Empire State Manufacturing Index climbed to 17 in September, contrasted to the previous 3.7. The stronger reading provided some release for the dollar bulls. It helped neutralize the disappointing statement of the industrial production figures of the country. The latter was seen as a significant factor that limited the gains for the US dollar. 

The market is fearing Brexit, and it triggers new sales. On Tuesday, in the House of Commons, an initial parliamentary vote on the UK bill removed its first hurdle. The legislation violates Britain’s Brexit deal with the EU.

The EU has already declared that passing the bill would lead to the collapse of the negotiations. This increases the chance of a no-deal Brexit. Investors could avoid making aggressive bets before the FOMC and BoE events this week.