GBP/USD clings to modest gains near 1.3370 area, lacks follow-through

The GBP/USD pair held on to its modest intraday gains through the early European session and was seen hovering near the top end of its daily range, around the 1.3370 region.

Following the previous day's good two-way price moves, the pair caught some fresh bids on the last day of the week and seemed rather unaffected by Brexit uncertainties. In the latest Brexit-related headlines, the EU's chief Brexit negotiator, Michel Barnier reportedly told envoys that he cannot say if a deal is possible at this stage.

It is worth reporting that both sides are yet to find a compromise on key sticking points – the so-called level playing field, fisheries and state-aid rules. Investors, however, remained optimistic about the possibility of a last-minute Brexit, which, in turn, underpinned the British pound and extended some support to the GBP/USD pair.

On the other hand, the US dollar remained depressed amid progress towards remedies for COVID-19 and hopes for more fiscal stimulus from the incoming Biden administration. This, along with sliding US Treasury bond yields, exerted some additional pressure on the greenback and remained supportive of the bid tone surrounding the GBP/USD pair.

That said, the recent range-bound price action witnessed over the past few trading sessions warrants some caution before traders start positioning for any big movement in either direction. Nevertheless, a sustained strength beyond the 1.3400 mark will be seen as a fresh trigger for bullish traders and pave the way for further near-term gains.

There isn't any major market-moving economic data due for release on Friday, either from the UK or the US. Hence, investors will keep a close watch on any incoming Brexit-related headlines. Apart from this, the broader market risk sentiment will influence the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair.

Technical levels to watch