GBP/USD jumps to 1.2600 with the dollar pulling back

• GBP/USD rebound from 1.2450 extends to 1.2600 area.
• The USD dollar drops across the board as market sentiment improves.
• A clear move above 1.2551 wouls ease bearish pressure – Credit Suisse.

The sterling has broken beyond previous session highs at 1.2570/75 area to extend its rebound from two-week lows at 1.2450 to 1.2600 area. The pair has pushed higher on Monday’s US afternoon session, buoyed by broad-based USD weakness as equity markets turned positive.  

The USD loses footing as market sentiment improves

Equity markets have turned around during the US trading session, after having opened the week with significant declines. The increase of COVID-19 cases in China and in several US states have triggered concerns that a second pandemic wave would cripple the incipient economic recovery.

These fears, however, seem to have eased throughout the day. Wall Street has experienced a sharp rebound, which has improved market sentiment, weighing on safe assets like the US dollar. The GBP/USD, which opened the week with a 0.25% decline, has bounced up to text levels 0.65% higher at 1.2600.  

GBP/USD: a move beyond 1.2546/51 would ease the bearish bias – Credit Suisse

The FX Analysts’ team at Credit Suisse see the pair vulnerable, although a clear move beyond 1.2550 would ease bearish pressure, “Resistance is seen at 1.2546/51 initially above which can ease the immediate downside bias with resistance then seen next at 1.2609 and with 1.2654 ideally now capping to keep the immediate risk to the downside.”