- GBP/USD witnessed some fresh selling after the UK announced the second national lockdown.
- Concerns about the economic fallout from COVID-19 restrictions benefitted the safe-haven USD.
- Technical selling below the 1.2880 level further seemed to have aggravated the bearish pressure.
The GBP/USD pair added to its intraday losses and dived to near one-month lows, around the 1.2855 region during the early European session.
The pair opened with a modest bearish gap on the first day of a new trading week in reaction to the imposition of second nationwide lockdown in the UK. Given the alarming pace of growth in new COVID-19 cases in the UK, Britain’s Prime Minister Boris Johnson on Saturday announced a lockdown across England until December 2. A senior cabinet member said on Sunday that the lockdown could be extended, which, in turn, took its toll on the British pound.
Meanwhile, growing market worries that renewed lockdown measures in Western countries could prove detrimental for the global economic recovery continued benefitting the US dollar’s relative safe-haven status. Developments surrounding the coronavirus saga largely overshadowed the latest optimism over a soft Brexit. It is worth reporting that EU and British Brexit negotiators will continue talks in Brussels on Monday and until around mid-week.
The continuation of intensive talks is now seen as a sign that both sides are still pushing to avoid a damaging breakdown in trade and seal a new partnership agreement before the end of UK’s transition period at the end of this year. The GBP bulls, however, seemed rather unimpressed, instead preferred to stay on the sidelines and wait for fresh Brexit updates.
Apart from the mentioned factors, possibilities of some short-term trading stops being triggered below last week’s swing lows, around the 1.2880 region, further seemed to have aggravated the downward pressure. Some follow-through selling below mid-1.2800s will be seen as a fresh trigger for bearish traders and pave the way for additional weakness for the GBP/USD pair.
Technical levels to watch
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