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  • Buyers lurk near 1.3125 levels, as USD bulls take a breather in early Europe.
  • But Brexit deadlock continues to negate Carney’s comments and upbeat UK services.
  • Round 2 of EU-UK Brexit negotiations remain the central focus amid US ADP data

The bid tone around the US dollar across its main competitors weakened in the European trading, now pushing the GBP/USD pair back above the midpoint of the 1.31 handle.

The pair continued to find strong bids near the 1.3125 region and now finally seems to break the Asian consolidative mode to the upside, as the US dollar seems to extend its retreat broadly, having faced rejection at the 97 level. A bout of profit-taking in the USD long positions cannot be ruled out heading into the key US ADP jobs report, a precursor for the highly influential US NFP due this Friday.

Meanwhile, the GBP bulls are seen struggling to take on the recovery beyond the 1.3150 levels, as the stalemate on the Brexit negotiations continues to overshadow the upbeat remarks from the BOE Governor Carney and stellar UK services PMI report released yesterday.

Reuters reported unnamed sources, as saying that the EU-UK Brexit talks ended without any agreement on a Brexit and that the talks would continue on Wednesday. Further, the UK Brexit Minister Clark warned that the UK will face difficult choice on tariffs if it leaves the EU without a deal. The Brexit jitters continue to dampen the sentiment around the pound.  

Looking ahead, all eyes will remain on the outcome of the round 2 of the EU-UK talks on the Brexit deal while the US ADP jobs data will be also watched for fresh directives on the buck.

GBP/USD levels to watch

FXStreet’s Analyst Yohay Elam notes: “Support is at the round number of 1.3100 which supported the pair on Tuesday. The next level to watch is 1.3050 which provided some support in late February and meets the rising 200 SMA. 1.3010 cushioned cable in mid-February and is followed by the swing low fo 1.2970 seen later last month.

1.3150 supported the pair on Tuesday and is fought over at the time of writing. 1.3200 was the high point on Tuesday and also a round number. 1.3270 was the peak on Monday, before GBP/USD closed the gap. 1.3350 is the high point recorded late in February.”