GBP/USD extends recovery move, now eyeing a move beyond 1.29 handle

The GBP/USD pair extended its recovery move from 5-week lows touched on Friday and is now looking to move back above the 1.2900 handle. 

The pair continued scaling higher through the mid-European session and the up-move was being supported by some renewed US Dollar selling bias. In fact, the key US Dollar Index surrendered all of its early recovery gains and drifted into negative territory, helping the pair to inch back closer to the top end of a four-day old trading range. 

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The pair's recovery move got an additional boost from the latest comments from the UK PM Theresa May's spokesman, noting that a clear structure is in place for the Brexit negotiations and that the government is confident to make sufficient progress in Brexit talks by October. 

It, however, remains to be seen if the pair is able to build on the recovery move or once again fails to sustain above the 1.2900 handle, especially after the recent dovish BoE tilt, which might continue to keep a lid on any additional up-move. 

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In absence of any major market moving economic releases, broader market sentiment surrounding the greenback would remain a key determinant of the pair's movement through Monday's trading session. 

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Technical levels to watch

Valeria Bednarik, Chief Analyst at FXStreet notes: "The downside potential will likely increase on a break below 1.2840, with scope then to test the 1.2800 region, en route to 1.2770 short term. Advances up to 1.2920/30, on the other hand, will provide selling opportunities."