The GBP/USD currency pair spiked on Wednesday to trade above 1.2520 for the first time this week despite the current political turmoil in the UK. Earlier on, the Bank of England had indicated that it would unwise to look to the interest rate people for an economic boost.

Boris Johnson’s takeover as UK Prime Minister has been received with mixed reactions but the news seemed to stimulate the pound sterling rallying it to trade at about 1.2521 before pulling back to settle at around 1.2496 ahead of US data.

GBP/USD Fundamentals Overview

From a fundamental perspective, the GBP/USD currency pair is trading at the back of a major day for the UK. Boris Johnson is now the new PM and now the prospect of a hard Brexit just took a step closer to becoming a reality.

In the US, trade tensions with China continue to escalate, but traders will be looking closer to today’s PMI data. Preliminary Markit Manufacturing, Services, and Composite PMIs are next in line coming up at around 13:45 GMT. New Home Sales numbers follow 15 minutes later.

Fed’s Ponsi will speak as the US session opens and this could provide some guidance to traders on the positions to take on the greenback.

GBP/USD Technical Analysis (the 60-min Chart)

From a technical viewpoint, the GBP/USD currency pair appears to be trading within a  descending wedge, which indicates a short-term bearish bias in the market. However, the recent rebound has seen the pair hit overbought levels as per the RSI indicator in the 60-min chart.

The bulls will be targeting short-term profits at around the 1.2521 level if the pair can breach the trendline resistance. On the other hand, the bears will hope that the pullback continues towards the 1.2473 level.

GBP/USD Technical Analysis (the Daily Chart)

In the daily chart, the bearish pressure is illustrated using the XABCD pattern, with the final bearish swing appearing to extend towards setting new 2-year lows. This sets new targets for long-term traders as the pair remains centrally placed in the RSI Indicator.

Therefore, the bulls will hope for an immediate reversal of the current trade by targeting long-term profits at around 1.2585 while the bears will look for a continuation of the trend by targeting profits at around 1.2373.

In summary, the GBP/USD currency pair has recently made a sharp rebound to edge above 1.2520, but the pullback thereafter will make thongs interesting for both the bulls and the bears.