GBP/USD bounces off lows, still in the red just above mid-1.2900s
- GBP/USD witnessed an intraday turnaround from the key 1.3000 psychological mark.
- Brexit-related headlines took its toll on the British pound and exerted some pressure.
- A softer tone surrounding the USD helped limit the losses ahead of Powell’s speech.
The GBP/USD pair broke down of its daily consolidative trading range and refreshed daily lows, around the 1.2915 region during the mid-European session.
The pair failed to capitalize on its early uptick to three-week tops, instead faced rejection near the key 1.3000 psychological mark and snapped two consecutive days of the winning streak. The latest leg of a sudden drop over the past hour or so was led by reports that the EU has no plans to offer concessions to the UK Prime Minister Boris Johnson before next week's Brexit deadline.
The bloc is betting that Johnson won't make good on his threat to walk out without a deal and is ready to let UK talks drag on into November or December, the report added further. According to a senior EU diplomat, the EU could even take a chance on Johnson pulling the plug on the deliberation rather than compromise on its red line. The not so optimistic headlines took its toll on the sterling.
The downside, however, remained limited, at least for the time being, amid a softer tone surrounding the US dollar. The latest optimism over the US President Donald Trump's return to the White House and renewed hopes of a compromise over a new coronavirus relief package remained supportive of the upbeat market mood, which, in turn, undermined the greenback's safe-haven demand.
The GBP/USD pair quickly recovered around 30-35 pips from daily swing lows and was last seen trading with only modest losses, just above mid-1.2900s. Market participants now look forward to the Fed Chair Jerome Powell’s scheduled speech, which might influence the USD price dynamics and produce some meaningful trading opportunities amid absent relevant economic releases.
Technical levels to watch