- GBP/USD remained under some selling pressure for the second straight day on Wednesday.
- A goodish pickup in the USD demand was seen as a key factor exerting pressure on the major.
- The downside remains cushioned as investors seemed reluctant ahead of BoE on Thursday.
The GBP/USD pair maintained its offered tone near mid-1.2500s through the early North American session, albeit held around 30 pips above daily swing lows.
The pair extended the previous day’s intraday retracement slide from the very important 200-day SMA and witnessed some follow-through selling for the second consecutive session on Wednesday. The downtick was exclusively led by a sudden pickup in the US dollar demand since the early European session.
Despite the upbeat market mood, growing fears over a second wave of the coronavirus infection and geopolitical tensions in Asia continue benefitted the greenback’s relative safe-haven status. However, the latest Brexit-related optimism held investors from placing any aggressive bearish bets around the GBP/USD pair.
The market concerns about a no-deal Brexit eased after the UK and the European Union agreed to intensify post-Brexit talks. Adding to this, the UK Prime Minister Boris Johnson said that an outline of a deal could be reached by the end of July, which seemed to be one of the key factors helping limit deeper losses for the GBP/USD pair.
Market participants also seemed to prefer to wait on the sideline ahead of the highly-anticipated monetary policy update by the Bank of England on Thursday. This, in turn, makes it prudent for traders to wait for a sustained move in either direction before positioning for the GBP/USD pair’s near-term trajectory.
Meanwhile, Wednesday’s US housing market data, which just fell short of market expectations, did little to provide any impetus to the GBP/USD pair. Moving ahead, the Fed Chair Jerome Powell’s second day of testimony will now be looked upon for some meaningful trading opportunities.
Technical levels to watch
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