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  • GBP/USD seesawed between tepid gains/minor losses through the mid-European session.
  • The incoming Brexit-related headlines kept a lid on any meaningful move up for the major.
  • A subdued USD price action helped limit the downside ahead of top-tier US macro releases.

The GBP/USD pair managed to rebound around 50 pips from the European session lows and is currently placed in the neutral territory, around mid-1.3300s.

The pair once again struggled to capitalize on its intraday positive move and started retreating from the 1.3385 region. The British pound started losing ground after the European Commission president Ursula von der Leyen raised doubts over the prospects for a Brexit deal. The top eurocrat said the disagreement over access to Britain’s fishing waters continues to block progress.

Meanwhile, British Prime Minister Boris Johnson reiterated that the UK’s position on fisheries hasn’t changed. Johnson further added that they will not ask for additional time to negotiate the trade deal with the European Union. With very little time left before the Brexit transition periods end on December 31, the lack of progress on key sticking points took its toll on the sterling.

The GBP/USD pair retreated around 80 pips from daily swing lows and was further pressured by a modest US dollar rebound amid some repositioning trade ahead of top-tier US macro releases. Despite the negative factors, the pair attracted some dip-buying near the 1.3300 mark and the subsequent rebound suggests that investors remain optimistic about the possibility of a last-minute Brexit deal.

Market participants now look forward to US economic docket – highlighting the releases of the preliminary (second estimate) GDP report, Durable Goods Orders and Initial Weekly Jobless Claims – for some impetus. The key focus, however, will be on the latest FOMC meeting minutes, which will play a key role in driving the near-term sentiment surrounding the greenback.

Apart from this, investors will also keep a close eye on fresh Brexit updates. Any positive development might be enough to provide a strong boost and assist the GBP/USD pair to break past a key barrier near the 1.3400 round-figure mark. The momentum could then push the pair towards September monthly swing highs, around the 1.3480 region en-route the key 1.3500 psychological mark.

Technical levels to watch