- GBP/USD extended the previous day’s retracement slide from over one-month tops.
- The USD benefitted from worsening US-China relations and exerted some pressure.
- No-deal Brexit fears further took its toll on the sterling and added to the selling bias.
The GBP/USD pair refreshed daily lows during the early European session, with bears now awaiting some follow-through weakness below the key 1.2500 psychological mark.
The pair struggled to find acceptance above the 1.2600 mark on Wednesday and witnessed a modest intraday pullback from over one-month tops. The retracement slide extended through the early part of Thursday’s trading action and was sponsored by a combination of factors.
The market concerns over hard Brexit resurfaced after the Bank of England Governor Andrew Bailey on Wednesday told banks to step up plans for the UK to leave the European Union without a trade deal. This coupled with the lack of progress in Brexit talks took its toll on the sterling.
On the other hand, worsening US-China relations drove some haven flows towards the US dollar, which further contributed to the GBP/USD pair’s downfall on Thursday. It is worth reporting that the US suspended Chinese airlines passenger flights to and from the US with effect from June 16.
The move came after the dragon nation earlier barred American carriers from re-entering China. The latest developments kept a lid on the recent optimism over a sharp V-shaped global economic recovery from the coronavirus pandemic and provided a goodish lift to the greenback’s safe-haven status.
In the absence of any major market-moving economic releases from the UK, the incoming Brexit-related headlines will play a key role in influencing the British pound. This coupled with the broader market risk sentiment might also be looked upon for some short-term trading opportunities.
Later during the early North American session, traders will take cues from the release of the Initial Weekly Jobless Claims from the US. The key focus, however, will remain on Friday’s closely watched US monthly jobs report – popularly known as NFP.
Technical levels to watch
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