GBP/USD regains 1.2900 and beyond, focus on Brexit/ UK politics

• Bulls look to retest multi-day tops at 1.2934 despite mixed markets.
• Holiday-thinned light trading and Brexit news to influence the spot.

The GBP/USD pair is back on the 1.29 handle and looks test three-day tops at 1.2934, as the bulls take back charge following a brief dip to 1.2892 lows amid souring risk appetite and a minor US dollar comeback.

The European markets are trading on a cautious foot on the first trading day of this week, as the sentiment remains undermined by concerns over the global economic slowdown that has helped revive some bids in the US dollar across its main competitors.

But the GBP bulls quickly regained control after the UK Cabinet Office Minister Lidington noted that the UK government is having useful discussions on Brexit with Brussels, as markets eagerly await the outcome of the meeting between the UK PM Theresa May and the European Commission President Juncker scheduled later today.

Meanwhile, markets digest the latest reports on the UK politics, citing that a group of UK Labour MPs are set to announce resignation at 1000 GMT – ITV News. On Friday, the Cable rallied hard following a broad-based US dollar sell-off on downbeat US macro news and dovish Fedspeak. Also, stellar UK retail sales report helped keep the buoyant tone intact around the pound.

Looking ahead, “given the UK-EU stalemate over the Irish backstop issue, the pair remains at the mercy of incoming Brexit headlines amid absent relevant market moving economic releases either from the UK or the US and the President’s Day holiday in the US”, FXStreet’s Analyst Haresh Menghani notes.

GBP/USD levels to watch