GBP/USD flirting with session lows, below mid-1.2900s

• The pair stalled its recent positive momentum ahead of 1.30 handle.
• A pickup in the US bond yields extended some support to the USD.
• The downside seems limited amid the recent UK political optimism.

The GBP/USD pair finally broke down of its daily consolidative trading range and dropped to fresh session lows, around the 1.2930 region in the last hour.
 
The pair failed to capitalize on the previous session’s positive move to four-week tops and edged lower during the mid-European session on Tuesday, snapping four consecutive days of winning streak amid a modest US dollar rebound.

Driven by the USD price dynamics

As investors digested the latest trade-related developments, improving risk sentiment-led goodish pickup in the US Treasury bond yields helped the greenback to stall its recent pullback and prompted some long-unwinding trade.
 
It is worth recalling that a CNBC report on Monday indicated that Chinese officials were pessimistic over a trade deal with the United States and exerted some fresh downward pressure on the greenback – for the third consecutive session.
 
In absence of any fresh trade-related headlines, market participants now seemed inclined to lighten their bearish USD bets amid some repositioning trade ahead of Wednesday’s important release of the FOMC policy meeting minutes.
 
Meanwhile, increasing chances of a majority for the Conservative Party at the upcoming UK snap election on December 12 might continue to underpin the British pound and helped limit deeper losses, at least for the time being.
 
Moving ahead, Tuesday’s US economic docket, featuring the release of housing market data, coupled with speeches by influential FOMC members, might influence the USD price dynamics and provide some fresh trading impetus.

Technical levels to watch