GBP/USD is probing new session lows near 1.3100 after rallying above 1.3200 in early European trade to 1.3210 nL1N29C092, reacting to rising gilt yields on the back of recent upbeat UK data releases.
GBP/USD bulls have been emboldened after PM Johnson's decisive election victory diminished immediate concerns about Britain crashing out of the EU without a deal.
Recent upbeat data is seen as removing a further obstacle to BoE rate hikes, which has helped lift GBP/USD. The UK parliament is widely expected approve the government's EU withdrawal deal on Thursday nL8N29C1U3, though it may prove to be a buy-the-rumour, sell-the-fact event as doubts remain about the ability of London and Brussels to negotiate the final status of their relationship by the Dec 31, 2020 deadline.
Johnson has said he will not to seek a further Brexit extension, which has rekindled no-deal fears for late-2020.
For now, GBP/USD bulls have the upper hand, while above the 55-DMA at 1.2994, but need a close above 1.3208 -- the 50% Fibo of 1.3516-1.2900's post election dip -- to maintain momentum.
Thursday's vote is expected to be a non-event, as GBP/USD vol, 1-week to 1-year, GBPVOL= remains steady near 7%.
If recent Brexit history is any guide, risks remain to the downside for GBP/USD. Any detour from the current stasis will put the 55-DMA and daily cloud top by 1.2905 in sharper focus.
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