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  • A subdued USD demand assisted GBP/USD to stage a modest intraday bounce.
  • Talks of negative BoE rates, Brexit uncertainties kept a lid on any strong gains.
  • The bias remains in favour of bears and supports prospects for further decline.

The GBP/USD pair edged higher through the early European session and refreshed daily tops, around the 1.2125 region in the last hour, albeit lacked any strong follow-through.

The pair opened with a modest bearish gap on the first day of a new trading week and fell to its lowest level since March 26 in reaction to the BoE Chief Economist Andrew Haldane’s dovish comments over the weekend. This comes on the back of the lack of progress in the Brexit negotiations, which took its toll on the British pound.

On the other hand, the US dollar struggled to gain any meaningful traction and was seen consolidating below three-week tops set on Friday, shrugging off the Fed Chair Jerome Powell’s optimistic comments about the US economy. A subdued USD demand turned out to be a key factor that extended some support to the GBP/USD pair.

A fresh wave of the global risk-on trade was seen as one of the key factors that undermined the greenback’s relative safe-haven status and provided a modest intraday lift to the sterling. The uptick, however, lacked any strong bullish conviction, indicating that the near-term bearish pressure might still be far from being over.

Meanwhile, growing fears about the second wave of coronavirus infections should help limit any meaningful USD pullback. Hence, any subsequent move up for the GBP/USD pair might still be looked upon as an opportunity to initiate fresh bearish positions amid absent relevant market-moving economic releases, either from the UK or the US.

  • Technical levels to watch