GBP/USD surges to 1.3000 neighborhood

The GBP/USD pair's recovery from 1.2850 level gained momentum, lifting the pair to 1.3000 neighborhood before retracing few pips to currently trade around 1.2970-75 band.

The pair's initial leg of weakness was led by strong US Dollar on the back of Friday's strong headline NFP print. During European trading session, the pair came under intense selling pressure on prospects of further easing by the Bank of England. The pair extended its slide below 1.2900 handle and dropped to 1.2850 before staging a remarkable short-covering rally from lower levels. 

Global risk-on sentiment, as depicted by buoyant equity markets seems, to have forced traders to cover their bearish GBP bets ahead of this week's event risk, BoE monetary policy decision on Thursday. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The technical picture for the GBP/USD pair shows that the risk remains towards the downside, as in the 4 hours chart, the price finally accelerated below its 20 SMA that has contained rallies ever since the month started, whilst the technical indicators are gaining bearish strength within negative territory."

"The pair has an immediate support at 1.2840, and a break below it should see the pair extending its decline down to 1.2790, en route to 1.2750. An immediate resistance comes at 1.2900, with a recovery above it resulting in the pair advancing up to 1.2940/60."