GBP/USD spikes through mid-1.2800s to fresh session tops

The GBP/USD pair managed to reverse early losses and staged a strong recovery of around 70-pips from sub-1.2800 level touched during Asian session on Tuesday.

The pair's sharp up-tick of over 60-pips from the 1.2800 neighborhood during early European session could be solely attributed to short-covering. Despite of the political uncertainty stemming out of the upcoming UK general election on June 8, which added to renewed concerns over a possible 'hard Brexit' scenario, bears failed to drag the pair below monthly lows support near 1.2775 region touched last Friday. Hence, a minor greenback pull-back, with the key US Dollar Index retreating from daily highs, seems to have prompted traders to lighten their bearish positions.

Meanwhile, possibilities of some stops being triggered on a break through mid-1.2800s hurdle might have also collaborated to the pair's strong up-move in the past hour or so, amid lack of any fresh fundamental drivers. Hence, it would be prudent to wait for a follow through buying interest before confirming any further up-move. 

Focus now shifts to the US economic docket, featuring the release of Core PCE Price Index, Personal Income / Spending data and CB's Consumer Confidence Index, later during the NA session.

Technical levels to watch

Immediate resistance is pegged near 1.2880 level, above which a fresh bout of short-covering could lift the pair beyond the 1.2900 handle towards an important support break-point turned resistance near the 1.2920 region. 

On the downside, retracement back below mid-1.2800s, leading to a subsequent drop below 1.2830 level, would turn the pair vulnerable to head back towards the 1.2800 handle before eventually dropping to an important support near the 1.2775-70 region.