- Renewed Brexit-pessimism continued weighing on the British Pound on Monday.
- Dismal BRC like-for-like sale data further dented the already weaker sentiment.
- A subdued USD demand seemed to be the only factor lending some support.
The GBP/USD pair lacked any firm directional bias and was seen oscillating in a narrow trading band, just below the 1.2300 handle through the Asian session on Tuesday.
The pair did witness some intraday bounce on Monday, albeit lacked any strong follow-through and quickly ran into some fresh supply near the 1.2335 region - an important pivotal point marked by 200-period EMA on the 4-hourly chart. Given that the bloc's officials see the UK PM Boris Johnson's new Brexit plan as insufficient, uncertainties surrounding Britain's exit from the European Union acted as one of the key factors exerting some pressure on the British Pound.
Brexit headlines continue to drive sentiment
This coupled with a modest pickup in the US Dollar demand, supported by a goodish rebound in the US Treasury bond yields and positive trade-related headlines, further collaborated to the pair's overnight downtick. White House economic adviser Larry Kudlow said on Monday that the United States was open to looking at China's proposals and that delisting of Chinese companies was not on the table.
The Greenback failed to capitalize on the previous session's move up, albeit the disappointing release of BRC like-for-like sales data - dropping -1.7% YoY in September as compared to -0.5% fall in the previous month - failed to provide any meaningful impetus to the major. This coupled with news that the UK PM Johnson is preparing for Brexit talks to collapse further collaborated towards capping any upside.
Given the lack of progress towards agreeing on a Brexit withdrawal deal before the EU Summit on October 17, any negative Brexit-related headlines might be enough to further dent the already weaker sentiment surrounding the Sterling and pave the way for a further near-term depreciating move amid absent relevant market moving economic releases from the UK.
Later during the early North-American session, the US economic docket - highlighting the release of Producer Price Index (PPI) - might influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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