GBP/USD headed to 1.2780 resistance on DUP/Tory duo?

Currently, GBP/USD is trading at 1.2747, up 0.71% on the day, having posted a daily high at 1.2757 and low at 1.2642.

CPI: what's been supporting sterling, despite the UK's political turmoil, time to fade? - Scotiabank

GBP/USD is garnering support from not only the surprise CPI data that rose 2.9% in the May year, above forecasts for a 2.7% gain, or that UK house prices rose 5.6% in Apr, above forecasts ahead of when the BoE meet this week, but there seems to be some stability in parliament again. UK Prime Minister May and Northern Ireland's DUP have seemed to have agreed on some form of a deal in their governmental coalition endeavour, awaiting finalisation later this week. The pound ran up to the aforementioned high on leaks that a deal between the DUP and the Conservatives is almost there.

UK consumer price inflation at 2.9% yet little prospect of BoE action - ING

The Democratic Unionist Party leader has said she hopes to seal a deal on supporting Theresa May's minority government "sooner rather than later", the BBC reported and said that after meeting the prime minister in Downing Street, Arlene Foster said discussions were "going well" and she hoped for a "successful conclusion".

One of the main topics under discussion is that of borders. The maintenance of a "frictionless" border between Northern Ireland and the Republic of Ireland is a must for the DUP.

"But there has been great uncertainty as to how this will be achieved, given that Mrs May wants to end free movement, leave the single market and leave the customs union to strike free trade deals elsewhere. The DUP position would require some form of deal with EU and the party is unlikely to support "no deal"" - reported the FT. 

The BBC understands a final meeting to approve the deal is set for Wednesday.

GBP/USD levels

Cable has tested 1.2640 three times over the past week and support has been solid there every time, explained analysts at Scotiabank. "Technically, that sets up a potential bull signal (triple bottom) on a break above the 1.2780 area (the intervening high point between the dips and also the late May lows). We are neutral between these two points for now but think a break either side of the range is a “go with” move."