- GBP/USD turns positive for the second straight day amid renewed USD selling.
- Doubts over additional US fiscal stimulus measures undermined the greenback.
- Brexit uncertainties might keep a lid on any runaway rally for the British pound.
The GBP/USD pair rallied over 60 pips from the early European session lows and refreshed daily tops, around the 1.2980 region in the last hour.
Following the previous day’s pullback of around 85 pips and an early dip to the 1.2920 region, the pair managed to regain traction and turned positive for the second consecutive session on Tuesday. The uptick was sponsored by the emergence of some fresh selling around the US dollar.
Investors seemed unconvinced that the US lawmakers could reach an agreement on a stimulus package ahead of the looming deadline on Tuesday. This, in turn, held the USD bulls on the defensive and was seen as one of the key factors that extended some support to the GBP/USD pair.
The British pound was further supported by the EU Brexit negotiator, Michel Barnier’s overnight comments, confirming that the EU remained available to intensify Brexit negotiations. It is worth recalling that trade talks between the UK and the EU had stalled amid disagreements over fishing access and competition issues.
Meanwhile, the UK Brexit Negotiator, Michel Frost, said on Monday that there is no point on resuming talks. Adding to this, the UK’s Brexit minister, Michale Gove affirmed that the UK is ready for an “Australian-style” exit from the Union. The conflicting remarks added to Brexit uncertainties and might keep a lid on any strong gains for the GBP/USD pair.
There isn’t any major market-moving economic data due for release from the UK on Tuesday. Hence, the incoming Brexit-related headlines will continue to play a key role in driving the sentiment surrounding the GBP pair. Meanwhile, the US economic docket features the second-tier releases of Building Permits and Housing Starts.
The data, along with the broader market risk sentiment, developments surrounding the US fiscal stimulus and coronavirus saga, might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
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