- GBP/USD witnessed some long-unwinding trade on Thursday amid resurgent USD demand.
- The downside is likely to remain limited amid optimism over the resumption of Brexit talks.
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
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.