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  • GBP/USD found support at 1.2995 to return to levels beyond 1.3000.
  • Risk aversion weighing on the GBP despite the upbeat Brexit news.
  • GBP/USD remains positive while above 1.2990 – UOB.

The sterling is attempting to trim losses during the North American session on Monday after having retreated to session lows at 1.2995 following a three-day decline from last week’s top at 1.3175. The pair has regained the 1.3000 level although upside moves remain limited.

Pound dives amid broad-based US dollar strength

Cable has resumed its downtrend this week, with the US dollar appreciating across the board with the investors seeking shelter in safe-haven assets in a risk-off session. The increase of COVID-19 infections, with the US and France reaching record levels of contagions and Spain announcing a new state of emergency have crushed market mood.

In Europe, the positive news from the Brexit negotiations, which have been extended until next Wednesday has failed to ease market concerns. EU representative, Michael Barnier will stay in London for intensive talks this week, which has boosted hopes of a late-minute deal to avoid a “hard Brexit”.

GBP/USD remains positive while above 1.2990 – UOB

On the technical level, the FX analysis team at UOB remains positive on the GBP while above 1.2990: “Upward momentum is beginning to ease but only a break of 1.2990 (no change in ‘strong support’ level) would indicate that the current upside risk has dissipated. Meanwhile, in order to rejuvenate the current flagging momentum, GBP has to move and stay above 1.3120 within these 1 to 2 days or the odds for further GBP strength would diminish quickly.”

Technical levels to watch