GBP/USD spikes to over 1-week tops, beyond 1.2700 mark and retreats

   •  The prevalent USD selling bias remains unabated after Powell’s scheduled speech.
   •  Further gains remained capped amid persistent UK political and Brexit uncertainties.

The GBP/USD pair held on to its mildly positive tone through the early North-American session, albeit now seemed struggling to extend the momentum beyond the 1.2700 handle. 

Against the backdrop of speculation over an imminent Fed rate cut, the fact that the Fed Chair Jerome Powell refrained from repeating the central bank's patient stance exerted some downward pressure on the US Dollar.

Speaking at an event hosted by the Chicago Fed, Powell said that the Fed will act as appropriate to sustain the expansion and opened the doors for a rate cut, but only if the trade war escalates further.

The US Treasury bond yields trimmed a part of the strong intraday gains in reaction the dovish comments, which undermined the already weaker greenback and was seen as a key factor behind the pair's sudden pickup in the past hour.

Meanwhile, the British Pound was further supported by optimism over the UK-US trade relations especially after the US President Donald Trump's comments, saying that we’ll have a very substantial trade deal with the UK.

Bulls, however, lacked any strong conviction and refrained to place any aggressive bets amid concerns that a pro-Brexit hardliner might replace the outgoing PM Theresa May and lead to a no-deal split. 

Nevertheless, the pair has managed to hold on to its modest daily gains for the third consecutive session and a sustained move beyond the mentioned handle should pave the way for further near-term recovery move.

Technical levels to watch