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GBP/USD flirting with daily lows, below 1.30 mark

  • GBP/USD failed to capitalize on the overnight positive move to one-week tops.
  • Rebounding US bond yields revived the USD demand and exerted some pressure.
  • No-deal Brexit/coronavirus concerns might keep a lid on attempted positive moves.

The GBP/USD pair edged lower through the early European session and is currently placed near the lower end of its daily trading range, around the 1.2980-75 region.

The pair failed to capitalize on the previous session's goodish positive move to one-week tops – levels just above the key 1.30 psychological mark – and witnessed some selling on Wednesday amid a modest pickup in the US dollar demand.

The upside is likely to remain capped

A modest recovery in the global risk sentiment allowed the US Treasury bond yields to rebound from all-time lows, which helped the key USD Index to stall its recent sharp pullback from multi-year tops and regain some traction on Wednesday.

This coupled with fears that Britain might crash out of the European Union (EU) at the end of the transition period later this year also played its part in holding investors from placing any bullish bets, rather prompted some selling at higher levels.

Concerns over a no-deal Brexit were further fueled by the EU's mandate for the key trade talks and future relationship with the UK, which emphasized on the need for a 'level playing field' and the need for the UK to be more aligned to current rules.

Given that the UK Prime Minister Boris Johnson has been emphasizing on the need for UK sovereignty and is looking for Canada-style trade deal, the latest Brexit-related development failed to impress bullish traders and might continue to cap any meaningful upside.

On the other hand, market worries over the global outbreak of the deadly coronavirus and its impact on the world economy should benefit the USD's perceived safe-haven status and exert some downward pressure amid absent relevant market-moving economic data.

Technical levels to watch

 

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