GBP/USD bounces-back above 1.2800, risk-on underpins

The GBP/USD pair stalled its downslide and re-attempts 1.28 handle, as risk-on remains in full swing, which helps underpin the sentiment around the risk currency GBP.

Markets cheer the outcome of the R1 of the French election, showing Macron and Le Pen in the lead for the R2 scheduled next Sunday, with Macron 2 percentage points ahead of Le Pen.  As a result, risk-on returned to markets, sending the treasury yields and Asian stocks through the roof.

The spot witnessed sharp sell-off in early trades, mainly in response to cross-driven weakness, especially after the EUR/GBP cross rallied hard post-French election – R1 outcome.

However, the losses remained capped as GBP/JPY benefited from risk-on moods, offering some respite to the GBP bulls. Moreover, EUR/USD’s rally driven broad USD sell-off also aids the tepid-recovery seen in cable over the last hour.

Focus now shifts back towards the fundamentals, with last week’s UK retail sales miss still weighing on investors’ mind. In the week ahead, the US macro updates will be closely eyed amid a data-light UK calendar. As for today, FOMC member Kashkari’s speech will provide some fresh incentives on the prices.

GBP/USD Levels to consider            

Momentum above 1.2851 (Apr 20 high) could lift the pair above 1.2912 (flash rally high), beyond which a test of 1.2950 (psychological levels) is imminent. Conversely, a break below 1.2780/70 (daily low/ Apr 20 low), leading to a subsequent break below 1.2758 (Apr 21 low) is likely to drag the pair towards testing its next support near 1.2700 (10-DMA/ zero figure).