GBP/USD dives to fresh session low, around 1.2500 mark

• GBP/USD met with some fresh supply and dropped to the 1.2500 neighbourhood in the last hour.
• Concerns about rising COVID-19 cases benefitted the safe-haven USD and exerted some pressure.
• The downside seems limited amid optimism over the UK Chancellor Sunak’s fiscal stimulus plan.

The GBP/USD pair quickly retreated around 50-55 pips from session tops and dived to fresh daily lows, around the 1.2515 region in the last hour.

The pair failed to capitalize on its early European session uptick to the 1.2570 region, rather met with some fresh supply and retreated further from three-week tops set on Tuesday. The pair has now drifted into the negative territory, albeit the downside is likely to remain limited.

Investors might refrain from placing any aggressive bets, instead, prefer to wait on the side-lines ahead of the UK Chancellor Rishi Sunak’s anticipated fiscal stimulus plan. Sunak is reported to announce £2 billion funding to cover ‘hundreds of thousands’ of work placements.

Meanwhile, the latest leg of a sudden fall over the past hour or so could be attributed to a modest pickup in the US dollar demand. Following an early dip, the greenback managed to regain some traction and added to the previous day’s positive move amid worries about rising COVID-19 cases.

Investors remain concerned that the ever-increasing number of coronavirus cases could trigger renewed lockdown measures to contain the spread. This, in turn, would once again put breaks on the economic activity and delay recovery, which continued underpinning the USD’s safe-haven demand.

Apart from the USD price dynamics and Sunak’s speech, investors will also keep a close eye on the post-Brexit talks between the UK and the EU negotiating teams. The incoming headlines will influence the British pound and produce some meaningful trading opportunities around the GBP/USD pair.

Technical levels to watch