- GBP/USD struggled to preserve its intraday gains and dropped to fresh session lows.
- Persistent Brexit-related uncertainties continued taking its toll on the British pound.
- A softer tone surrounding the greenback did little to impress bulls or lend any support.
The GBP/USD pair retreated over 60 pips from the European session swing highs and refreshed daily lows, around the 1.2920-15 region in the last hour.
The prevalent selling bias surrounding the US dollar – amid uncertainty over the next round of the US fiscal stimulus measures – assisted the GBP/USD pair to regain some positive traction on Tuesday. The uptick, however, lacked any strong follow-through, instead quickly ran out of the steam near the 1.2975-80 region amid persistent Brexit-related uncertainties.
In the latest Brexit news, the European Commission was out with an official statement and was willing to intensify talks with the UK. The statement also confirmed that the EU's chief Brexit negotiator, Michel Barnier will speak to his UK counterpart, David Frost later this Tuesday. If successful, trade talks could resume from tomorrow.
Separately, the UK PM's spokesperson reiterated that the resumption of talks could only happen if the EU fundamentally changes its approach and make clear that they have done so. Given the disagreements over fishing access and competition issues, the comments took its toll on the British pound and prompted some fresh selling around the GBP/USD pair.
From a technical perspective, the pair's inability to capitalize on the positive move and the subsequent pullback points to the emergence of some fresh selling at higher levels. That said, it will still be prudent to wait for some strong follow-through selling below the 1.2865-60 support before positioning for any further depreciating move.
On the economic data front, the disappointing release of the US Housing Starts, coming in at 1.415 million for September, was largely offset by slightly better-than-expected Building Permits, which rose to 1.553 million during the reported month. The data did little to influence the GBP/USD pair as the focus remains on the incoming Brexit headlines and developments surrounding the US fiscal stimulus.
Technical levels to watch
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