GBP/USD sits near daily tops, struggling to extend momentum beyond 1.30 handle

• GBP/USD quickly reverses an early dip to multi-day lows.
• The uptick seemed unaffected by a modest USD strength.
• Brexit uncertainties, BoE rate cut speculations might cap gains.

The GBP/USD pair is currently placed near the top end of its daily trading range, with bulls now looking to build on the momentum further beyond the key 1.30 psychological mark.

The pair managed to find some support ahead of mid-1.2900s and for now, seems to have stalled the post-dismal UK retail sales data pullback from levels beyond the 1.3100 round-figure mark. The pair's intraday bounce of around 40-50 pips lacked any obvious fundamental catalyst and seemed rather unaffected by the prevalent bullish sentiment surrounding the US dollar.

The upside is likely to remain limited

The greenback remained well supported by the recent positive US economic data, which raised expectations that the US economy will continue to expand. Adding to this, diminishing odds for any further rate cuts by the Fed might continue to underpin the buck and keep a lid on any runaway rally for the pair amid relatively lighter trading conditions on the back of a holiday in the US.

Moreover, market concerns that Britain will crash out of the European Union at the end of this year might further hold investors from placing any aggressive bullish bets. This coupled with firming expectations for a 25bps BoE rate cut at the upcoming monetary policy meeting on 30 January might further contribute towards capping the upside for the major.

Hence, any subsequent recovery move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly, making it prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move.

Technical levels to watch