GBP/USD jumps toward 1.3600 on reports that UK could join the TTP

• Pound gained momentum across the board and hits fresh high versus USD. 
• Financial Times: UK looks to join Pacific trade group after Brexit.

The pound rose across the board following a report suggested that the United Kingdom could join the Trans-Pacific Partnership. According to the Financial Times, “Britain has held informal talks about joining a flagship Pacific trade group, in an audacious bid to kick-start exports after Brexit.” 

GBP/USD broke above previous highs and rose toward 1.3600. Cable peaked at 1.3598, the highest level since September 20. As of writing it was holding near the top, with a strong bullish tone. Before reaching the new daily high, the pair was hovering around 1.3550, moving in ranges consolidating daily gains. 

Previously, economic data was released. In the UK, the Manufacturing PMI came at56.3 for December against expectations of 58.0 and down from November's 58.2. The pound remained mostly unchanged after data. Later, the US Manufacturing PMI came in at 55.1, the highest since March 2015. The data and higher US yields only helped the greenback limit losses.

After the recent rally the pound is now the top performer of the day and is up even against the Japanese yen. 

Levels to watch 

GBP/USD is testing the 1.3600 area. A break higher could open the doors for a test of 2017 at 1.3655. The short-term bullish tone is likely to remain intact as long as price holds above 1.3550: a consolidation significantly below could open the doors for a correction. Potential support levels are seen at 1.3515, 1.3490 (Jan 2 low) and 1.3465 (Dec 14 high).