GBP/USD spikes and retreats, struggles to stay above 1.3200 handle

• GBP/USD gains some follow-through traction on Tuesday.
• The uptick lacked any obvious catalyst and remained limited.
• Modest USD bounce/Brexit uncertainties might cap the upside.

The GBP/USD pair quickly reversed an early European session dip and rallied over 70-pips in the last hour, albeit struggled to find acceptance above the 1.3200 handle.

The pair added to the previous session's goodish intraday positive move and gained some follow-through traction for the second consecutive session on Tuesday. The pair attracted some dip-buying near 100-hour SMA and seemed rather unaffected by a modest US dollar rebound.

Limited upside potential for GBP

The prevalent positive tone around the US Treasury bond yields extended some support to the greenback. However, the fact that investors are still recovering from the initial shock of continuing tensions between the US and Iran held the USD bulls on the defensive.

Meanwhile, the latest leg of a sudden spike over the past hour or so could be attributed to some cross-driven strength, stemming from the GBP/JPY cross. Apart from this, the uptick lacked any fundamental catalyst and thus, warrant some caution before placing fresh bullish bets.

Adding to this, concerns that the UK might crash out of the European Union at the end of this year might further contribute towards capping gains. Hence, it will be prudent to wait for some strong follow-through buying before confirming a bullish bias amid absent relevant economic data from the UK.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of Non-Manufacturing PMI, which might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North-American session.

Technical levels to watch