GBP/USD flirting with session tops near 1.2770

The British Pound has started the week on a firm fashion, taking GBP/USD to the 1.2760/70 band, or daily highs.

GBP/USD attention to UK politics

Cable left behind last Friday’s sell-off to the vicinity of the 100-day sma near 1.2630 in response to the results from the UK elections. Recall that Conservatives lost majority and PM Theresa May asked DUP to join Tories in order to form a minority government.

The conditions over this deal are still to be defined, while the future tone of Brexit negotiations continues to be in the centre of the debate amongst investors, and carries the potential to be the main driver of the Sterling in the next weeks/months.

From the positioning front and according to the latest CFTC report, GBP net shorts have climbed to 4-week highs during the week ended on June 6.

In the data space, the salient event this week will be the BoE meeting (Thursday), UK’s inflation figures (Tuesday), labour market report (Wednesday) and retail sales (Thursday).

GBP/USD levels to consider

As of writing the pair is up 0.09% at 1.2759 and a breakout of 1.2782 (55-day sma) would aim for 1.2907 (20-day sma) and then 1.2979 (high Jun.8). On the other hand, the immediate support aligns at 1.2632 (low Jun.9) followed by 1.2622 (100-day sma) and finally 1.2576 (200-day sma).