- GBP/USD attracted some dip-buying near the 1.3000 mark amid a softer tone surrounding the USD.
- The US political uncertainty, a modest rebound in equity markets undermined the safe-haven USD.
- Brexit uncertainties held bulls from placing aggressive bets and capped the upside for the major.
The GBP/USD pair rallied around 55-60 pips from daily swing lows and shot to fresh daily tops, near the 1.3060 region in the last hour, albeit quickly retreated few pips thereafter.
The pair continued attracting some dip-buying near the key 1.3000 psychological mark, or 200-day SMA support and was being supported by a mildly softer tone surrounding the US dollar. Despite negative news surrounding the second wave of coronavirus infections, the greenback struggled to gain any meaningful traction on the back of growing wariness about the US presidential election.
The incoming polls have been indicating a solid lead for the Democrat candidate Joe Biden over the incumbent President Donald Trump. However, a narrow gap in certain key swing states fueled uncertainty about the actual outcome. This, in turn, held the USD bulls on the defensive and was seen as a key factor that assisted the GBP/USD pair to snap three consecutive days of the losing streak.
Apart from this, a modest rebound in the equity markets further undermined the greenback's relative safe-haven status. However, the slow progress in the US stimulus talks, along with worries about the potential economic impact of fresh coronavirus-induced lockdown measures might keep a lid on the optimism. This should continue to benefit the USD's status as the global reserve currency.
The USD remained depressed through the early North American session and seemed rather unimpressed by Tuesday's release of stronger-than-expected US Durable Goods Orders data. In fact, the headline orders expanded by 1.9% MoM in September while orders excluding transportation increased by 0.8% as against consensus estimates pointing to a growth of 0.5% and 0.4%, respectively.
Meanwhile, the upside for the GBP/USD pair is more likely to remain limited as investors await for updates from extended Brexit talks before placing fresh directional bets. It is worth recalling that he EU's Chief Brexit Negotiator, Michel Barnier has extended his stay in London until Wednesday. The development was seen as a positive sign raised hopes for a last-minute Brexit trade deal.
Investors, however, remain sceptic about a deal amid differences over the key sticking point of fisheries. This, eventually, kept a lid on any strong gains for the GBP/USD pair, which has now retreated around 25-30 pips from daily tops and was last seen trading with only modest gains, around the 1.3030 region.
Technical levels to watch
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