GBP/USD recovery accelerates beyond 1.2400

• GBP/USD's rebound from 1.2266 lows accelerates beyond 1.2400 
• The pound extends recovery supported by a risk-on market mood and hits session highs at 1.2465.
• Longer-term, the pair remains trapped between 1.2235 and 1.2645.

Sterling’s recovery from 1.2266 low on Thursday has gathered pace with the GBP/USD jumping past the 1.2400 level. The pair is regaining lost ground on Friday, reaching intra-day highs at 1.2450 area favoured by a risk-on market mood and probably by squaring US dollar long positions ahead of the UK market closing.  

The pound picks up on lockdown restriction hopes

The pound is bouncing up on Friday after having lost nearly 2% earlier this week, on the back of the negative outlook of the UK, hit hard by the COVID-19 pandemic and Brexit uncertainty.

The market, however, is welcoming with optimism the easing of lockdown restrictions, on hopes that global economic recovery from the coronavirus shutdown might be faster than expected. Furthermore, April’s US Non-Farm Payrolls report, which has shown a lower than expected job destruction, has contributed to the positive market mood.

GBP/USD trapped within a range between 1.2235 and 1.2645

From a longer-term perspective, the pair remains trading sideways between 1.2235 and 1.2645 and, according to the FX Strategists at UOB Group it is likely to remain in that area for the next weeks; ‘The break of the ‘strong support’ level at 1.2370 on Wednesday (06 May) suggests that last week’s 1.2644 high could be a short-term top. That said, downward momentum is lackluster and it is too early to expect a sustained decline. From here, GBP is more likely to consolidate and trade between 1.2280 and 1.2500 for a period.”