- Fails to capitalize on the overnight goodish bounce, rather meets with some fresh supply.
- Yet another disappointing UK PMI prompted some fresh selling amid Brexit uncertainties.
- The USD runs out of the steam amid sliding US bond yields and helped limit deeper losses.
The GBP/USD pair managed to rebound around 40-50 pips from daily swing lows, albeit now seemed struggling to extend the momentum further beyond the 1.2300 handle.
Following the previous session’s goodish intraday recovery of over 130 pips and a subsequent pullback, the pair met with some fresh supply and was being weighed down by some renewed US Dollar buying interest during the early part of Wednesday’s trading action.
Brexit headlines continue to influence
Meanwhile, the British Pound was further weighed down by yet another disappointing release of the UK construction PMI. This coupled with some Brexit-related headlines further dented the already weaker sentiment and dragged the pair to an intraday low level of 1.2227.
The European Union (EU) sources were quoted saying that the only option for a new Brexit deal before October 31 is to return to Northern Ireland-only backstop and that time-limit to the backstop is impossible. If this is the final UK Brexit plan, it won’t work, the sources added further.
However, the fact that the EU stands ready to grant an extension of the Brexit deadline provided some immediate respite to the GBP bulls and limit any deeper losses. Adding to this, a modest intraday USD pullback extended some additional support and helped the pair to bounce off lows.
The global flight to safety, amid concerns over slowing global economic growth, triggered a fresh leg of a downfall in the US Treasury bond yields and weighed on the Greenback. Meanwhile, a slight disappointment from the US ADP report did little to provide any meaningful impetus.
It will now be interesting to see if the pair is able to find any buying interest at lower levels or continues with its recent sharp pullback from two-month tops. The focus now shifts to the written Brexit proposals from the UK, which might further influence the momentum and produce some short-term trading opportunities.
Technical levels to watch
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