• Rising fears of a no-deal Brexit continues to weigh on the British Pound.
  • A subdued USD demand fails to provide impetus but lends some support. 

The GBP/USD pair remained on the defensive through the mid-European session on Thursday and was seen oscillating in a narrow trading band, below the 1.2700 handle.

After the previous session's intraday pullback from the 1.2750-60 supply zone, a combination of diverging forces failed to provide any meaningful impetus and led to range-bound price action on Thursday. The British Pound continues to be weighed down by the fact that the UK Parliament on Wednesday rejected a motion led by the opposition Labour Party to try and block a no-deal Brexit. 

Given that the European Commission has cleared its stance that there will be no Brexit renegotiation and that a hard-line Brexiteer - Boris Johnson remains a leading candidate to be the next British PM continued fueling fears of a no-deal split and kept exerting some pressure on the major, albeit a subdued US Dollar demand helped limit deeper losses, at least for the time being.

The greenback struggled to build on the overnight bounce from 11-week lows, albeit maintained its safe-haven status in the wake of growing concerns over a further escalation in the US-China trade tensions and did little to influence the pair's momentum. Hence, it would be prudent to wait for a sustained move in either direction before positioning for any meaningful trading opportunities.

Thursday's US economic docket - featuring the second-tier releases of import/export prices and the usual initial jobless claims data, seems unlikely to provide any meaningful impetus amid persistent UK political and Brexit uncertainties.

Technical levels to watch

As Yohay Elam, FXStreet's own Analyst writes – “If it breaks lower, weak support awaits at 1.2640, then by 1.2610 (a swing low from early June), and more importantly – the four-month low of 1.2558.”

“Conversely, GBP/USD faces robust resistance on the way up. 1.2700 is a round number that has capped it earlier in the day also earlier in the week. Even stronger resistance awaits at 1.2765 – a double top confirmed on Wednesday,” he added further.

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