GBP/USD remains depressed near mid-1.2800s

• The British Pound remained on the defensive amid fresh Brexit uncertainty.
• Softer risk mood benefitted the USD and added to the pair’s weaker tone.

The GBP/USD pair held on to its softer tone through the early European session on Wednesday and is currently placed at the lower end of its daily trading range, around the 1.2850-40 region.
 
The British Pound remained on the defensive in wake of the latest Brexit development, wherein the UK lawmakers on Tuesday rejected the UK Prime Minister Boris Johnson’s three-day timetable for passing Brexit legislation. The government later announced to pause the Brexit legislation and the lack of clarity about the next step weighed on the Sterling.

Weighed down by Brexit confusion

Meanwhile, a source in Johnson’s office said that a new election would be the only way to break the Brexit impasse if the EU agrees to a delay until January, which added to the uncertainty. Adding to this, a slight deterioration in the global risk sentiment was seen benefitting the US Dollar’s relative safe-haven status against its British counterpart and further collaborated to the weaker tone.
 
Given that thins on the trade war front are quiet, Brexit was driving a general risk-off mood on Wednesday. However, firming market expectations that the Fed will cut interest rates further at its upcoming monetary policy meeting on October 29-30 might keep a lid on any strong USD gains and extended some support to the major.
 
This coupled with the fact that the risk of a no-deal scenario has been largely been neutralized in the recent past, any subsequent dips might still be seen as an opportunity to initiate some fresh bullish positions. Hence, it will be prudent to wait for a strong follow-through selling before confirming that the pair might have actually topped out in the near-term and positioning for any further near-term corrective slide.

Technical levels to watch