GBP/USD has rallied more than 3 percent from last week's flash-crash low, but the gains are a symptom of dollar weakness rather than cable strength and any further sterling rise will probably lag other currencies as the key Jan 15 vote on Brexit approaches.
With GBP/USD retreating from resistance near 1.2800 repeatedly over the last eight trading sessions, traders appear less comfortable reducing dollar longs versus the pound than the euro or yen.
A considerable share of GBP/USD strength this month has resulted from broad dollar weakness as Fed Chairman Powell and his colleagues express patience about increasing interest rates again.
However, there is also growing optimism that prior to the main vote on PM May's Brexit deal, amendment voting nL8N1Z95FO may reduce the chances of a hard Brexit, seen as GBP/USD positive.
Though reduced odds of a chaotic EU exit may initially boost GBP/USD, failure to pass May's deal will also open up the possibility of new elections, a delay in Article 50 and possibly a second referendum.
The resulting political and economic uncertainty will likely keep the BoE from normalizing rates, adding downward pressure to the pound nL1N1ZA08R even as other currencies gain against the dollar.
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