GBP/USD trades with modest losses, below 1.2700 mark
- GBP/USD met with some fresh supply and started retreating from the vicinity of multi-week tops.
- Fresh concerns about a no-deal Brexit took its toll on the British pound and exerted some pressure.
- A modest USD rebound from lows further contributed to the intraday selling bias around the major.
The GBP/USD pair refreshed daily lows, around the 1.2670 region during the early North American session, albeit quickly recovered few pips thereafter.
The pair struggled to capitalize on its early uptick and witnessed a modest intraday pullback from the vicinity of multi-week tops, around the 1.2755 region. Renewed concerns about a no-deal Brexit turned out to be one of the key factors that took its toll on the British pound and exerted some fresh downward pressure on the GBP/USD pair.
The latest round of negotiations in London ended this Thursday. The UK and the EU said that talks remain at a stalemate and they were still some way off reaching a post-Brexit trade agreement. The EU's chief Brexit negotiator accused the UK government of being “unwilling to break the deadlock” and warned that a Brexit deal is “unlikely”.
Meanwhile, Britain's chief Brexit negotiator David Frost said that they will not achieve the goal of striking a preliminary agreement by the UK Prime Minister Boris Johnson's July deadline. Frost further added that the UK should be prepared for all scenarios for the end of the transition period on December 31, including the possibility that a deal will not be reached.
This coupled with a modest US dollar rebound from lows exerted some additional pressure on the GBP/USD pair. However, concerns that the ever-increasing COVID-19 cases would delay the US economic recovery, coupled with the impasse over the next round of US economic stimulus measures capped any meaningful USD upside. This, in turn, helped limit any deeper losses for the GBP/USD pair, at least for now.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below the overnight swing lows, around the 1.2645-40 region, before traders start positioning for any further near-term depreciating move.
Technical levels to watch