- GBP/USD failed to capitalize on its early uptick and met with some fresh supply near the 1.2485 area.
- A modest pullback in the European equity markets benefitted the USD’s relative safe-haven status.
- Bears still await a sustained break below the 1.2400 mark before positioning for any further weakness.
The GBP/USD pair quickly retreated over 60 pips and dropped to fresh session lows, around the 1.2420 region in the last hour, albeit lacked any follow-through selling.
Following a brief consolidation, the pair gained some traction during the early European session and climbed to an intraday high level of 1.2483. The positive move came after the final UK Services PMI print for April was revised higher to 13.4 from 12.2 estimated earlier.
The uptick, however, lacked any strong bullish conviction, instead fizzled out rather quickly amid a sudden pickup in the US dollar demand. The spillover effect from a selloff in European bonds dragged stocks lower and benefitted the greenback’s relative safe-haven status.
This comes on the back of a US-China spat over the origin of the virus and weighed on investors’ sentiment. Adding to this, increasing prospects for an extended lockdown in the United Kingdom and renewed concerns about hard-Brexit further took its toll on the sterling.
Despite the pullback, the pair has still managed to hold its neck above the 1.2400 round-figure mark. Bearish traders are likely to wait for a sustained break through the mentioned support level before positioning for any further near-term depreciating move for the major.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data will influence the USD price dynamics and produce some meaningful trading opportunities later during the early North-American session.
Technical levels to watch
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