- GBP/USD attracts some dip-buying near 1.2465 area, albeit lacked any strong follow-through.
- The downbeat market mood continued benefitting the safe-haven USD and capped the upside.
- Bulls are likely to wait for some follow-through buying before positioning for any further gains.
The GBP/USD pair reversed an early European session slide to the 1.2465 region and was last seen trading in the neutral territory, around the 1.2500 mark.
The pair witnessed a modest intraday pullback on Wednesday and was being weighed down by a combination of factors. A turnaround in the global risk sentiment, as depicted by a sharp retracement in the equity markets, benefitted the safe-haven US dollar and was seen as one of the key factors that exerted some pressure on the GBP/USD pair.
The ever-increasing number of new coronavirus cases in many states across the US and Latin America has raised the risk of renewed lockdowns to control the spread. This, in turn, overshadowed the overnight optimism about a sharp V-shaped global economic recovery – led by positive data from Europe and US –and dented investors’ risk appetite.
Meanwhile, the British pound was further pressured by reports – citing the office of the US Trade Representative – that the United States is considering tariffs on $3.1 billion of exports from the United Kingdom, France, Spain and Germany.
The downtick lacked any strong follow-through, instead attracted some dip-buying and lifted the GBP/USD pair back above the key 1.2500 psychological mark. However, the risk-off mood held investors from placing aggressive bullish bets and kept a lid on any meaningful upside.
The pair remained well below daily tops set earlier during the Asian hours and remains at the mercy of the USD price dynamics amid absent relevant market moving economic releases. This makes it prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move for the GBP/USD pair.
Technical levels to watch
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