GBP/USD slides below 1.3100 mark, fresh session lows

The intraday USD buying interest picked up pace in the last hour and dragged the GBP/USD pair back below the 1.3100 mark, or fresh daily lows.

The pair witnessed some selling during the early European session on Thursday and eroded a part of the previous day's strong positive move of over 240 pips to six-week tops. A weaker tone around the equity markets helped revive demand for the safe-haven US dollar, which, in turn, was seen as a key factor that prompted some selling around the GBP/USD pair.

The global risk sentiment took a hit amid fading hopes about a pre-election US fiscal package, especially after the US President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise on stimulus. Moreover, House of Representatives Speaker Nancy Pelosi acknowledged that the measures might now pass before November 3.

Apart from a broad-based USD strength, the pullback lacked any obvious fundamental catalyst and is more likely to remain limited on the back of the latest optimism over the resumption of Brexit talks. The EU's chief Brexit negotiator, Michel Barnier said on Wednesday that a Brexit agreement was within reach and showed readiness to discuss all subjects based on the legal text.

It is worth recalling that the recent trade talks between the UK and the EU had stalled amid disagreements over fishing access and competition issues. Meanwhile, Barnier warned that level playing field remains a fundamental concern and that there will be no trade deal without a fair solution for fisheries, which eventually held the GBP bulls from placing fresh bets.

This, coupled with the imposition of fresh lockdown measures to curb the second wave of the coronavirus infection in the UK, further collaborated towards capping gains for the GBP/USD pair. There isn't any major market-moving economic data due for release from the UK. Hence, the incoming Brexit related headlines will play a key role in driving the sterling.

Later during the early North American session, traders will take cues from the release of the US Initial Weekly Jobless Claims data from the US. This, along with developments surrounding the next round of the US fiscal stimulus measures and the broader market risk sentiment, will influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch