GBP/USD hangs near daily lows, bears await a sustained break below 1.3000 mark

The GBP/USD pair has now dropped to the lower end of its daily trading range, with bears making a fresh attempt to extend the downfall further below t  |  27/10/2020 08:41
  • GBP/USD drifts back into the negative territory for the fourth consecutive session.
  • Brexit-related uncertainties undermined the sterling and exerted some pressure.
  • The emergence of some fresh USD buying further contributed to the intraday slide.

The GBP/USD pair has now dropped to the lower end of its daily trading range, with bears making a fresh attempt to extend the downfall further below the key 1.3000 psychological mark.

The pair struggled to capitalize on its intraday positive move, instead met with some fresh supply near the 1.3045 region and has now drifted back into the negative territory for the fourth consecutive session. Persistent Brexit-related uncertainties held the GBP bulls from placing any aggressive bets and kept a lid on any meaningful upside for the GBP/USD pair.

In the latest development, the EU's Chief Brexit Negotiator, Michel Barnier has extended his stay in London until Wednesday. This was described as “a very good sign” by Northern Ireland Secretary Brandon Lewis and raised hopes for a last-minute Brexit trade deal. Investors, however, remain sceptic about a deal amid differences over the key sticking point of fisheries.

Adding to this, growing worries about the potential economic impact from renewed lockdown measures to curb the second wave of coronavirus infections in the UK further took its toll on the British pound. This, coupled with a sudden pickup in the emergence of some fresh buying around the US dollar exerted some pressure on the GBP/USD pair and contributed to the ongoing slide.

The continuous surge in COVID-19 cases, along with the slow progress in the US stimulus talks dampened the market mood. This was evident from a steep fall in the US equity markets on Monday, which, in turn, benefitted the greenback's status as the global reserve currency. That said, the uncertain US political environment might cap the USD and extended some support to the GBP/USD pair.

There isn't any major market-moving economic data due for release from the UK on Tuesday. Hence, the incoming Brexit-related headlines will play a key role in influencing the sentiment surrounding the sterling. Later during the early North American session, the release of the US Durable Goods Orders data will also be looked upon to grab some short-term trading opportunities.

Technical levels to watch

 

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