GBP/USD: Bulls cheer broad US dollar weakness above 1.2600

GBP/USD takes the bids around 1.2630 while heading into the London open on Thursday. In doing so, the Cable pair refreshes the highest levels since June 16 while also flashing a five-day winning streak. The pair’s latest strength took clues from the US dollar’s extended weakness as well as early signals that the Brexit deadlock might come to an end soon. However, the weekly US Jobless Claims, Sino-American tension and the UK-China tussles will be in the spotlight for fresh impetus.

Be it above 3.0 million coronaviruses (COVID-19) new cases or the record-high budget deficit, not to forget the long-standing tussle with China, the US dollar had to bear it all. In the latest blow, American Secretary of State Mike Pompeo criticized Beijing’s anti-human right behavior whereas US Trade Representative (USTR) Robert Lighthizer is up for speaking at 17:00 GMT. While portraying the pessimism, the US dollar index (DXY) drops to the fresh four-week low of 96.24, down 0.25% as we write.

On the other hand, the Telegraph’s news that the UK and EU could agree 'multi-annual' Brexit deals for some fishing rights have favored the pound. In separate news, the BBC increased the hope of "special provisions" with Europe over the food supply to Northern Ireland and eased fears of a no-deal Brexit. Even so, German Chancellor Angela Merkel’s reiterated that the bloc should stay ready for a no-deal Brexit. The British currency cheered over £30 billion ‘push’ by Chancellor Rishi Sunak the previous day.

During the early-Thursday, UK Foreign Secretary Dominic Raab highlighted the global ire against Beijing’s Hong Kong security law. The same adds fuel to the already tensed related between London and China.

Looking forward, the on-going Brexit talks and updates concerning the macro dislike for the dragon nation will be the key. Additionally, the virus news and the US weekly Jobless Claims, expected 1375K against 1427K, will also be important to determine near-term trade direction.

Technical analysis

As the Cable keeps the previous day’s break above 200-day EMA, the bulls are targeting a horizontal area comprising multiple highs marked since April 14 around 1.2645/55. Meanwhile, a daily close below 200-day EMA level of 1.2590 could drag the quote to 61.8% of Fibonacci retracement of March month’s fall near 1.2515.