- GBP/USD gained some traction on Monday amid renewed USD selling bias.
- Persistent Brexit-related uncertainty kept a lid on any strong positive move.
- Investors might refrain from placing fresh bets ahead of Jackson Hole Symposium.
The GBP/USD pair failed to capitalize on its intraday positive move to the 1.3115 area and quickly retreated around 20-30 pips from daily tops, albeit lacked any strong follow-through.
The pair managed to regain some positive traction on the first day of a new trading week and was being supported by the emergence of some fresh US Dollar selling. The political deadlock over the next round of the US fiscal stimulus measures, along with growing concerns about the US economic recovery continued weighing on the greenback through the early part of the trading activity on the first day of the week.
The USD was further pressured by a softer tone surrounding the US Treasury bond yields. Adding to this, the upbeat market mood was also cited as another reason that dented the greenback’s relative safe-haven status. The global risk sentiment remained well supported by the latest optimism over a potential treatment for the coronavirus disease, which, in turn, remained supportive of the early GBP/USD uptick.
However, the lack of progress in Brexit talks held the GBP bulls from placing any aggressive bets and kept a lid on any strong gains for the major. The EU’s chief negotiator Michel Barnier said on Friday that the seventh round of Brexit talks failed to yield any breakthrough. Barnier’s UK counterpart, David Frost also mentioned about the deadlock, paving the way for weeks of uncertainty and took its toll on the sterling.
Despite the intraday pullback, the downside is likely to remain cushioned as investors might now prefer to wait on the sidelines ahead of the Fed Chair Jerome Powell’s speech during the Jackson Hole Symposium later this week. Powell’s remarks will be closely scrutinized for clearer guidance about the Fed’s policy outlook, which will influence the near-term USD price dynamics and provide a fresh directional impetus.
Technical levels to watch
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