GBP/USD jumps to two-day tops, eyeing a sustained move beyond 1.2900 mark

• Growing opposition to the UK’s Internal Market Bill prompted short-covering move around GBP/USD.
• The heavily offered tone surrounding the USD further contributed to the pair’s strong intraday rally.

The GBP/USD pair refreshed daily tops during the early North American session, with bulls now looking to build on the momentum beyond the 1.2900 round-figure mark.

The pair witnessed some short-covering move on the first day of a new trading week and for now, seems to have stalled its recent bearish slide to seven-week lows touched on Friday. Growing opposition to the UK’s so-called Internal Market Bill turned out to be one of the key factors that provided a goodish lift to the British pound.

It is worth recalling that Britain unveiled draft legislation last week, which acknowledged that some powers conferred by the legislation could break international law in a very specific and limited way. The UK government's attempt to override parts of the divorce treaty with the EU added to growing market fears about a no-deal Brexit.

On the other hand, the US dollar remained depressed on the back of diminishing odds for the next round of the US fiscal stimulus measures. Adding to this, the upbeat market mood – supported by renewed optimism over a potential vaccine for the highly contagious coronavirus disease – further undermined the greenback's relative safe-haven status.

Meanwhile, the latest leg of an uptick over the past hour or so could also be attributed to some technical buying on a sustained move beyond the previous session's swing high, around mid-1.2800s. In the absence of any major market-moving economic releases, the key focus will remain on a debate on the UK's Internal Market Bill in the House of Commons.

The sterling could witness some fresh selling if the legislation is accepted. Conversely, if the bill is rejected by the common, the GBP/USD pair seems more likely to build on its momentum and aim back towards reclaiming the key 1.3000 psychological mark, though no-deal Brexit concerns might keep a lid on any runaway rally, at least for the time being.

Technical levels to watch

GBP/USD