GBP/USD slides back closer to session lows, around 1.3070-65 region

The GBP/USD pair retreated around 50 pips from the European session swing highs to levels beyond the 1.3100 mark and has now dropped back to the lower end of its daily trading range.

The emergence of some fresh selling around the US dollar assisted the pair to regain some positive traction during the first half of the trading action on the last day of the week. However, persistent Brexit-related uncertainties kept a lid on any further gains, instead prompted some fresh selling at higher levels and dragged the GBP/USD pair into the negative territory for the second straight session.

As investors awaited developments surrounding the next round of the US fiscal stimulus measures, the optimism over the first approved treatment for COVID-19 boosted investors' confidence and undermined the greenback's safe-haven status. Adding to this, expectations of a strong Democratic victory in the US elections exerted some additional downward pressure on the buck and provided a minor lift to the GBP/USD pair.

The UK and EU were reported to have made some progress on competition guarantees, including state aid rules. However, fishing remains a key sticking point. The UK Prime Minister Boris Johnson has insisted on taking back control over its waters, while the EU wants access to the fishing waters. The fact that the UK is struggling to agree on a deal with the EU seemed to be the only factor weighing on the GBP/USD pair.

Apart from this, the imposition of fresh lockdown measures, to curb the second wave of coronavirus infections in the UK, further held the GBP bulls from placing any aggressive bets, instead prompted some selling around the GBP/USD pair. However, the downside remains limited, at least for the time being, as investors eagerly await fresh Brexit updates before positioning for the next leg of a directional move.

Technical levels to watch