GBP/USD drifts below mid-1.2400s, fresh session low

• GBP/USD failed to capitalize on its attempted intraday uptick to the 1.2485 region.
• Concerns about rising COVID-19 cases, Brexit uncertainties capped any strong gains.
• The downside is likely to remain limited amid sustained selling bias around the USD.

The GBP/USD pair quickly retreated around 50 pips from daily tops and is currently placed near the lower end of its daily trading range, below mid-1.2400s.

Following a brief consolidation through the early part of Friday’s trading action, the GBP/USD pair gained some traction and climbed to an intraday high level of 1.2486. The prevalent upbeat market mood continued undermined the safe-haven US dollar, which coupled with an upward revision of the UK Services PMI provided a modest lift to the pair.

The uptick, however, lacked any strong follow-through as investors refrained from taking excessive risk amid concerns that the continuous surge in COVID-19 cases could trigger renewed lockdowns and delay the global economic recovery. This comes amid persistent Brexit-related uncertainties and prompted some selling around the GBP/USD pair.

It is worth recalling that the UK and EU negotiators failed to make any substantial breakthrough on several important issues. Moreover, a meeting scheduled on Friday has been delayed for next week due to the divergences between the two parties, which cast serious doubts about the possibility of reaching an agreement before the end of the transition period in December 2020.

Despite the negative factors, the downside is likely to remain limited amid relatively thin liquidity conditions. Given that the US markets will remain closed on the back of Independence Day holiday, the GBP/USD pair seems more likely to remain confined in a range, though seems all set to post strong gains for the first week in the previous four.

Technical levels to watch