GBP/USD’s upside attempts remain limited below 1.3360/80

• GBP/USD capped below 1.3360/80, steady above 1.3300
• The pound remains bid in a risk-on market.
• Sterling's rally to be capped below 1.3422 – Commerzbank.

The pound is trading higher for the third consecutive day on Tuesday, 0,12% up against the US dollar at the time of writing although bulls are lacking follow-through past 1.3360/80 area. On the downside, the pair remains steady above 1.3300 at its highest levels in nearly three months.

Cable remains bid amid the positive market mood

The upbeat news about the progress of AstraZeneca’s COVID-19 vaccine has boosted investors’ sentiment, pushing the pound higher against its main rivals. Hopes of a cure for the pandemic might be rolled out over the next months have been especially GBP-supportive, since the UK has been one of the worst-hit countries by the pandemic.

Furthermore, the market remains confident about a Brexit deal as representatives of the UK and the European Union remain negotiating, aiming to bring positions closer in controversial issues with less than six weeks to the December 31, the day when the post-Brexit transition period ends.

GBP/USD seen capped below long-term downtrend line at 1.3422 – Commerzbank

The FX analysis team at Commerzbank expects the current GBP rally to be capped below trendline resistance at 1.3422:  “GBP/USD has broken higher and is on course for major resistance offered by the 1.3422 multi-year downtrend and we look for this to ideally cap the market and provoke failure. This is reinforced by the 1.3515 December 2019 high. This is a long-term pivot and both levels represent major resistance.”

Technical levels to watch