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  • GBP/USD failed to capitalize on an intraday uptick and has now drifted into the negative territory.
  • Brexit-related uncertainties, dovish remains by BoE’s Saunders weighed on the British pound.
  • The downside is likely to remain limited ahead of the closely watched US monthly jobs report.

The GBP/USD retreated around 60 pips from an intraday high level of 1.3318 and has now dropped back towards the lower end of its daily trading range.

The pair failed to capitalize on its intraday positive move, instead met with some fresh supply and has now drifted back into the negative territory for the third consecutive session. A subdued US dollar demand was seen as one of the key factors behind the GBP/USD pair early uptick, albeit renewed concerns about a no-deal Brexit kept a lid on any further gains.

According to The Times, senior officials in the UK Prime Minister Boris Johnson’s office see only a 30%-40% chance that there will be a Brexit trade agreement with the EU amid an impasse over state aid rules. The Time further added that the UK wants the percentage of fish quotas reserved for UK vessels in British waters to increase from some 25% now to more than 50%.

This added to the pessimism ahead of the next round of negotiations next week, which coupled with dovish comments by the BoE MPC member Michael Saunders took its toll on the British pound. Saunders said that the UK central bank will probably add to their already unprecedented emergency support measures in the coming months to achieve a sustained return of inflation.

The GBP/USD pair was last seen hovering near the 1.3260-55 region, though the downside is likely to remain limited as investors might refrain from placing any aggressive bets ahead of the US monthly jobs data. The NFP report will influence market expectations about the Fed’s next policy move, which should influence the near-term USD price dynamics and provide a fresh directional impetus.

Technical levels to watch

 

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