Sterling struck a 20-week high at 1.2995 on Wednesday, undeterred by pre-Fed position squaring, while dovish expectations for U.S. monetary policy signaling could propel it even higher.
GBP/USD likely finds resistance at 1.3000 and then 1.3020, the 76.4% Fibonacci of 1.3516-1.1413.
Above that, March and February highs by 1.32 would be targeted.
Sterling has diversified its gains beyond the dollar, rising versus the yen and euro recently, indicating less concern about stalled EU-UK trade negotiations and more focus on falling U.S. growth expectations and extreme Fed accommodation.
The pound also benefited from euro gains after the EU recovery package while additional U.S. relief remains the subject of contentious congressional negotiations.
Sterling spec positioning has also recovered from -36k in early June to -15k as of July 21, with its three-big-figure rise in the recent July 22-28 IMM reporting period likely reduced that short further.
With bulls firmly in control, bears need a break below 10-day-moving-average support by 1.2758 to regain momentum, and then control below 1.2622, the 50% Fib of 1.2252-1.2991.
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