GBP/USD reverses a dip to sub-1.3000 levels, upside seems limited
- GBP/USD remained under some selling pressure for the third consecutive session on Monday.
- Persistent Brexit-related took its toll on the sterling and exerted some pressure on the major.
- The risk-off mood benefitted the safe-haven USD and contributed to the intraday selling bias.
The GBP/USD pair momentarily slipped below the key 1.3000 psychological mark during the early European session, albeit lacked any follow-through and quickly recovered few pips thereafter.
The pair extended last week's retracement slide from the 1.3175 region and witnessed some follow-through selling for the third consecutive session on Monday. The sterling was weighed down by persistent Brexit-related uncertainties, which coupled with a modest pickup in the US dollar demand continued exerting some pressure on the GBP/USD pair.
Despite the resumption of the Brexit talks and reported progress on state aid rules, investors remain sceptic about a deal over differences over the key sticking point of fisheries. It is worth recalling the EU's chief Brexit negotiator, Michel Barnier had warned last week that there will be no trade deal without a fair solution for fisheries.
On the other hand, the greenback attracted some haven flows and further contributed to the offered tone surrounding the GBP/USD pair. Worries about the second wave of coronavirus infections and its effect on the fragile global economic recovery weighed on investors' sentiment, which, in turn, benefitted traditional safe-haven assets.
Adding to this, the growing market conviction that US lawmakers will be able to strike a deal before the US presidential election on November 3 further underpinned the USD. However, expectations of a strong Democratic victory in the US elections held the USD bulls from placing aggressive bets and extended some support to the GBP/USD pair.
In the absence of any major market-moving economic releases, the incoming Brexit-related headlines will continue driving the sentiment around the pound. The US economic docket features the release of New Home Sales data, which, along with the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch