GBP/USD clings to gains near multi-week tops, just below 1.2700 mark

• GBP/USD gains traction for the third straight session on Tuesday amid sustained USD selling.
• The latest optimism over a potential vaccine for coronavirus undermined the safe-haven USD.
• Sustained strength beyond 1.2700 mark is needed to confirm any further appreciating move.

The GBP/USD pair jumped to levels beyond the 1.2700 mark, or six-week tops during the early European session, albeit quickly retreated few pips thereafter.

The pair added to the previous day's strong intraday positive move of around 150 pips and edged higher for the third consecutive session on Tuesday. In the absence of any negative Brexit-related headlines, the prevalent selling bias around the US dollar was seen as a key factor driving the GBP/USD pair higher.

The continuous surge in coronavirus infections in the US fueled concerns that the economic recovery will take much longer than expected and kept the USD bulls on the defensive. This coupled with the optimism over a COVID-19 vaccine lifted the global risk sentiment and further undermined the safe-haven greenback.

Apart from this, the uptick could further be attributed to some technical selling, following the overnight breakthrough the 1.2625-30 resistance zone. Bulls might now wait for a sustained move beyond the 1.2700 round-figure mark before positioning for any further appreciating move, possibly towards the 1.2745 region.

In the absence of any major market-moving economic releases, either from the UK or the US, the pair remains at the mercy of the USD price dynamics. The broader risk sentiment will play a key role in influencing the greenback's safe-haven demand and produce some meaningful trading opportunities around the GBP/USD pair.

Technical levels to watch