- GBP/USD continued with its struggle to find acceptance above the key 1.2500 psychological mark.
- Concerns about rising COVID-19 cases benefitted the safe-haven USD and exerted some pressure.
- The focus will remain on any headlines coming out of the ongoing EU-UK post-Brexit negotiations.
The GBP/USD pair dropped to fresh session lows, around the 1.2465-60 region in the last hour and has now eroded the previous day’s positive move.
Having once again failed to find acceptance above the key 1.2500 psychological mark, the pair edged lower during the first half of trading action on Tuesday and was pressured by a modest pickup in the US dollar demand.
The upbeat US ISM Non-Manufacturing PMI released on Monday added to last week’s stellar US jobs report and indicated that the US economy has started to recover. This, in turn, helped ease the recent bearish pressure around the USD. Moreover, worries that the ever-increasing coronavirus cases could trigger renewed lockdown measures provided an additional boost to the greenback’s relative safe-haven status against its British counterpart.
This comes amid persistent Brexit-related uncertainties, which further took its toll on the sterling and contributed to the GBP/USD pair softer tone through the early European session, though the downside remained limited, at least for now. Investors might be reluctant to place any aggressive bets, rather prefer to wait for any headlines coming out of the ongoing Brexit talks between the European Union (EU) and the UK in London.
There isn’t any major market-moving economic data due for release on Tuesday, either from the UK or the US. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent positive move – witnessed over the past one week or so – might have already run out of the steam. Meanwhile, bulls are likely to wait for a sustained move beyond the 1.2500 mark before positioning for any further appreciating move.
Technical levels to watch
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