- GBP/USD failed to capitalize on its intraday uptick to levels beyond the 1.3100 mark.
- Fears about the second wave of COVID-19 cases, no-deal Brexit weighed on the GBP.
- A broad-based USD weakness helped limit deeper losses ahead of BoE on Thursday.
The GBP/USD pair faded an early European session spiked to weekly tops and refreshed daily lows, around the 1.3060 region in the last hour.
The pair managed to regain some traction on Wednesday and built on the previous day’s goodish bounce of around 90 pips from the 1.2980 region. The heavily offered tone surrounding the US dollar was seen as one of the key factors behind the GBP/USD pair’s sudden move up over the past hour or so.
The USD languished near two-year lows amid diminishing hopes of a swift US economic recovery and persistent worries about the ever-increasing coronavirus cases. This coupled with the impasse over the next round of the US fiscal stimulus measures further undermined the already weaker greenback.
However, concerns over the second wave of COVID-19 infections in the UK held the GBP bulls from placing any aggressive bets. This comes on the back of renewed fears of a no-deal Brexit, which capped the upside for the GBP/USD pair, rather prompted some fresh selling at higher levels.
The British pound lost some ground after the final UK Services PMI was revised slightly lower to 56.5 from the preliminary estimate of 56.6. The downside, however, remained cushioned as investors seemed reluctant to place aggressive bets ahead of the BoE monetary policy decision on Thursday.
In the meantime, Wednesday’s US economic data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session. The US economic docket highlights the release of the ADP report on private-sector employment and ISM Non-Manufacturing PMI.
Technical levels to watch
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