GBP/USD remains depressed near 1.3400 mark

• GBP/USD came under some renewed selling pressure on Tuesday amid a pickup in the USD demand.
• The lack of progress in the post-Brexit trade negotiations further contributed to the intraday selling.
• Relatively thin liquidity conditions held traders from placing aggressive bets ahead of the US data.

The GBP/USD pair rallied around 90 pips from the mid-European session swing lows, around the 1.3360 region, albeit lacked any strong follow-through.

The pair failed to capitalize on the previous day’s strong rebound of over 300 pips and witnessed some selling during the first half of the action on Tuesday. The discovery of a new variant of coronavirus and the imposition of fresh lockdown/travel restrictions in the UK continued benefitting the safe-haven US dollar. This, in turn, was seen as a key factor exerting pressure on the GBP/USD pair.

The British pound was further pressured by headlines that the EU has rejected the latest UK proposal on fisheries, which remains a key sticking point in the post-Brexit trade negotiations. In other developments, the UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen reportedly held a phone call yesterday in an attempt to strike a compromise on fisheries.

However, the fact that there is no change to the status quo since the weekend, pre-holiday thin liquidity conditions held traders from placing aggressive bets and helped limit the downside. The GBP/USD pair managed to attract some dip-buying at lower levels but struggled build on the momentum and the upside remained capped near mid-1.3400s, which should now act as a key pivotal point.

Moving ahead, traders now look forward to the release of the final version of the US Q3 GDP report. The US economic docket also features the releases of Richmond Manufacturing PMI, Conference Board’s Consumer Confidence Index and Existing Home Sales. Apart from this, the broader market risk sentiment will influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair.

Technical levels to watch