GBP/USD drifts back closer to 1.2700 mark, lacks follow-through

The GBP/USD pair refreshed daily lows during the early European session, albeit lacked any strong follow-through selling below the 1.2700 round-figure mark.

The pair failed to capitalize on its early uptick, instead met with some fresh supply near the 1.2755 region – just ahead of multi-week tops set on Tuesday. The latest leg of a sudden drop of over 50 pips lacked any obvious fundamental catalyst but followed Brexit-related news. The UK and EU are expected to provide statements on this week's post-Brexit talks later this Thursday.

This comes on the back of the overnight reports that the UK government and the EU will fail to sign a trade deal, which revived fears of a no-deal Brexit. This, in turn, exerted some pressure on the British pound and momentarily dragged the GBP/USD pair below the 1.2700 mark. However, the prevalent selling bias surrounding the US dollar helped limit any deeper losses.

Worries that the second wave of coronavirus outbreak in the US could delay the economic recovery kept the USD bulls on the defensive. The greenback was further pressured by the impasse over a $3 trillion fiscal stimulus bill. Meanwhile, the optimism over a potential COVID-19 vaccine remained supportive of the upbeat market mood and did little to lend any support to the safe-haven USD.

There isn't any major market-moving economic data due for release from the UK on Thursday. Hence, it will now be interesting to see if the GBP/USD pair is able to attract some fresh buying or traders opt to further lighten their bullish bets ahead of the Brexit update.

Meanwhile, the US economic docket highlights the release of Initial Weekly Jobless Claims. This, along with developments surrounding the US fiscal measures will influence the USD price dynamics and assist traders to grab some short-term trading opportunities.

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