- GBP/USD retreated around 220 pips from daily swing highs amid a strong pickup in the USD demand.
- The uncertainty US political environment forced investors to take refuge in the safe-haven greenback.
The GBP/USD pair maintained its heavily offered tone through the early European session and refreshed daily lows, around the 1.2930-25 region in the last hour.
The pair added to this week’s goodish recovery move from the vicinity of mid-1.2800s and shot to near two-week tops during the early part of the trading action on Wednesday. The early positive move, however, fizzled out rather quickly and the GBP/USD pair witnessed a dramatic turnaround from the 1.3140 region.
Early results of the US election showed that the race to White House was tighter than anticipated. Moreover, reports indicated that there will be a delay in results from key battleground states – Wisconsin, Michigan and Pennsylvania. The uncertainty forced investors to hedge their positions and drove some aggressive flows towards the US dollar.
Apart from this, a steep intraday fall in the US equity futures provided an additional boost to the greenback’s safe-haven status. The global risk sentiment took a hit in reaction to President Donald Trump’s comments, saying that we will go to the Supreme Court and want all voting to stop. The remarks fueled concerns that the outcome will be challenged.
The market focus will remain on the US political development, which, along with the broader market risk sentiment will continue to influence the USD price dynamics and infuse some volatility around the GBP/USD pair.
Technical levels to watch
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