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  • GBP/USD seesawed between tepid gains/minor losses through the mid-European session.
  • The GBP bulls seemed rather unimpressed by the UK Chancellor Sunak’s fiscal stimulus plan.
  • Concerns over rising COVID-19 cases benefitted the safe-haven USD and capped the upside.

The GBP/USD pair had some good two-way price moves on Wednesday and now seems to have stabilized in the neutral territory, around the 1.2540-35 region.

Following an early uptick to the 1.2565-70 region, the pair witnessed a modest intraday pullback during the early European session and was being weighed down by the emergence of some buying around the US dollar.

The ever-increasing numbers of COVID-19 cases drove some haven flows and assisted the greenback to add to the overnight gains, which turned out to be one of the key factors that exerted some pressure on the GBP/USD pair.

The pair retreated further from three-week tops set on Tuesday, albeit managed to attract some buying just ahead of the key 1.2500 psychological mark ahead of the UK Chancellor Rishi Sunak’s update on his spending plans.

The British pound did get a minor lift after Sunak set out the Government’s plans to protect jobs and pledged up to £30 billion in support, which includes a £2 billion kickstart scheme to create more jobs for young people.

The Chancellor also announced a bonus scheme for companies that re-hire furloughed workers and introduced a widely-expected stamp duty holiday on properties, along with a new ‘Eat Out to Help Out’ discount scheme at restaurants.

The announced measures were broadly consistent with market expectations and did little to undermine prospects for a V-shaped economic recovery. This, in turn, failed to impress bulls or provide any meaningful impetus to the GBP/USD pair.

Apart from this, investors also seemed reluctant to place any aggressive bets and preferred to wait for fresh updates, if the EU and the UK are likely to reach some kind of a trade agreement by the end of October.

In the absence of any major market-moving economic releases, it will be prudent to wait for a sustained move in either direction before positioning for any meaningful intraday momentum.

Technical levels to watch