GBP/USD jumps to over one-week high around mid-1.3500s, US ADP eyed for fresh impetus

• GBP/USD continued scaling higher for the fourth successive day on Wednesday.
• BoE rate hike expectations remained supportive amid sustained USD selling bias.
• Investors now eye the US ADP report for some short-term trading opportunities.

The USD selling remained unabated through the early part of the European session and pushed the GBP/USD pair to a one-and-half-week high, around mid-1.3500s in the last hour.

The pair built on its recent bounce from the 1.3360-1.3355 area, or over two-month low touched last week and gained traction for the fourth successive day on Wednesday. The British pound continued drawing support from expectations that the Bank of England will hike interest rates at its upcoming meeting.

On the other hand, the US dollar was weighed down by less hawkish comments by Fed officials, pushing back against markets bets for a 50 bps rate hike in March. The combination of supporting factors helped offset the UK political drama and remained supportive of the GBP/USD pair's ongoing positive momentum.

Wednesday's move up could further be attributed to some follow-through technical buying following the overnight sustained break through the key 1.3500 psychological mark. It, however, remains to be seen if bulls are able to maintain their dominant position or opt to lighten their bets ahead of the key event/data risks.

The BoE is scheduled to announce its policy decision on Thursday and announce the first back-to-back interest rate rises since 2004. This would allow policymakers to begin paring back the £895 billion balance sheet by stopping the reinvestment of expired bonds, which should continue to act as a tailwind for sterling.

Apart from this, the market focus will be on the release of the closely-watched US monthly jobs report – popularly known as NFP on Friday. In the meantime, the US ADP report on private-sector employment, due later this Wednesday, might influence the USD price dynamics and provide some trading impetus to the GBP/USD pair.

Technical levels to watch