GBP/USD eases from YTD tops, still well bid just below 1.3300 mark

• GBP/USD gained some strong positive traction on Friday amid a broad-based USD selloff.
• The GBP bulls largely shrugged off Brexit concerns, BoE Governor Bailey’s dovish comments.
• A sustained move back above the 1.3300 mark needed to confirm any further appreciation.

The GBP/USD pair shot to fresh YTD tops, around the 1.3320 region during the early North American session, albeit quickly retreated few pips thereafter.

Following the previous day's volatile swings and a brief consolidation through the early part of the trading action on Friday, the pair caught some fresh bids and finally broke out of a near two-week-old trading range. The US dollar remained under some heavy selling pressure in the wake of dovish Fed signals, which, in turn, was seen as one of the key factors driving the GBP/USD pair higher.

The Fed Chair Jerome Powell, during his keynote speech at the Jackson Hole Symposium, said on Thursday that the Fed is willing to tolerate inflation overshooting the 2% target for some time in order to compensate years of undershooting. The comments raised speculations that the Fed will increase its monetary stimulus and keep rates lower to support the economic recovery from the pandemic.

Apart from a broad-based USD weakness, possibilities of some short-term trading stops being triggered on a sustained move back above the 1.3240-50 region further contributed to the GBP/USD pair strong positive move. The GBP bulls seemed rather unaffected by concerns over the lack of progress in Brexit talks and also shrugged off the BoE Governor Andrew Bailey's dovish comments in the last hour.

Bailey said the UK central bank has more ammunition to support the economy from its coronavirus shock. Bailey also supported the possibility of negative interest rates, albeit failed to impress bearish traders or prompt any meaningful selling around the GBP/USD pair. Nevertheless, bulls might now wait for a sustained move back above the 1.3300 round-figure mark before placing fresh bets.

Technical levels to watch

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