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  • GBP/USD witnessed some heavy selling on Wednesday amid a strong pickup in the USD demand.
  • Worries over rising COVID-19 cases and fresh lockdown restrictions benefitted the safe-haven USD.
  • Brexit uncertainties further took its toll on the British pound and contributed to the steep decline.

The GBP/USD pair continued losing ground through the mid-European session and tumbled to fresh one-week lows, just below mid-1.2900s in the last hour.

Following the previous day’s modest bounce, the pair came under some renewed selling pressure on Wednesday and prolonged this week’s retracement slide from the 1.3175 region. The downfall marked the fourth day of a negative move in the previous five was exclusively sponsored by a strong pickup in the US dollar demand.

The global risk sentiment took a hit amid the imposition of fresh restriction to curb a resurgence in new coronavirus cases. This, in turn, fueled concerns that economic growth will weaken once again and triggered a selloff in the equity markets, which provided a strong boost to the greenback’s status as the global reserve currency.

The USD bulls seemed unaffected by growing wariness about the US presidential election. Nations polls have been indicating that Democrat candidate Joe Biden is ahead of incumbent President Donald Trump, though the gap is narrow in certain key swing states. Adding to the uncertainty is the possibility that the election outcome can be contested.

Apart from a broad-based USD strength, the UK’s impending departure from the European Union kept the GBP bulls on the defensive and contributed to the heavily offered tone surrounding the GBP/USD pair. The steep intraday slide could further be attributed to some technical selling below the key 1.3000 psychological mark.

In the absence of any major market-moving economic release, either from the UK or the US, development surrounding the coronavirus saga will drive the market risk sentiment and influence the USD price dynamics. This, along with the incoming Brexit-related headlines will be looked upon for some meaningful trading opportunities.

Technical levels to watch