GBP/USD remains on the defensive, around 1.3080-75 region

• GBP/USD was seen oscillating in a range around the 1.3100 mark through the mid-European session.
• Nervousness ahead of the next round of Brexit talks held the GBP bulls from placing aggressive bets.
• The impasse over the US fiscal stimulus measures undermined the USD and helped limit the downside.

The GBP/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European session. The pair was last seen trading with modest losses near the lower end of its daily range, around the 1.3075-80 region.

The pair failed to capitalize on its early uptick to the 1.3120 region and witnessed a modest intraday pullback on the first day of a new trading week. The pullback lacked any obvious fundamental catalyst and could be solely attributed to some nervousness ahead of the upcoming Brexit talks.

Bilateral trade negotiations are set to resume in Brussels on August 18. Given that Britain’s chief negotiator David Frost showed optimism over reaching a Brexit agreement in September, the improving sentiment on Brexit trade talks should continue to extend some support to the British pound.

This, coupled with the prevalent US dollar selling bias might further contribute towards limiting any meaningful slide for the GBP/USD pair. The uncertainty over the US fiscal stimulus measures, sliding US Treasury bond yields, the upbeat market mood continued exerting some pressure on the greenback.

The global risk sentiment remained well supported by hopes of a vaccine for the highly contagious COVID-19. Adding to this, the postponement of the US-China trade deal review the postponement of the US-China trade deal review and provided an additional boost to investors’ confidence.

Moving ahead, market participants now look forward to the US economic docket – featuring the release of the Empire State Manufacturing Index. The data might influence the USD price dynamics and produce some short-term trading opportunities during the early North American session.

Technical levels to watch