GBP/USD clings to gains near session tops, around 1.2875-80 region

The GBP/USD pair traded with a positive bias through the early European session and was last seen hovering near the top end of its daily range, around the 1.2875-80 region.

Following the previous day's pullback of around 100 pips from the 1.2930 region, or one-week tops, the pair managed to regain traction and was being supported by a combination of factors. The British pound was underpinned by the overnight comments by the Bank of England (BoE) policymaker, Dave Ramsden, who downplayed the possibility of negative interest rates in the short-term.

This comes amid the optimism over a breakthrough in the upcoming Brexit trade negotiations, starting this Tuesday, which extended some additional support to the sterling. This, coupled with a softer tone surrounding the US dollar remained supportive of the uptick for the second consecutive session on Tuesday, though the positive move lacked any strong bullish conviction.

However, worries about the second wave of COVID-19 infections, along with the political uncertainty in the US helped limit the USD pullback and capped the upside gains for the GBP/USD pair. Investors also seemed reluctant to place any aggressive bets, rather preferred to wait for fresh Brexit updates and the first US presidential debate before positioning for any firm direction.

In the meantime, traders are likely to take cues from the broader market risk sentiment. Apart from this, the release of the Conference Board's US Consumer Confidence Index will influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch