- GBP/USD reversed an early dip to multi-week lows post-UK macro data.
- The intraday uptick seemed unaffected by a pickup in the USD demand.
- Fears of a no-deal Brexit might hold investors from placing bullish bets.
The buying interest around the British pound picked up some pace during the early North-American session and pushed the GBP/USD pair to fresh daily tops, around the 1.3035 region.
Following an early dip to six-week lows, around the 1.2940 region, the pair caught some fresh bids and moved into the positive territory in reaction to better-than-expected UK construction PMI print for January.
The upside is likely to remain limited
The positive momentum seemed rather unaffected by the prevailing bullish sentiment surrounding the US dollar, which remained well supported by a strong intraday upsurge in the US Treasury bond yields on Tuesday.
Meanwhile, renewed concerns that the UK might crash out of the European Union at the end of the transition period later this year might further hold investors from placing aggressive bullish bets and cap any strong gains.
It is worth recalling that the UK Prime Minister Boris Johnson on Monday –speaking to reporters – said the UK should not be obliged to accept EU rules and has no need to bind itself to an agreement with the EU.
Separately, the EU chief Brexit negotiator Michel Barnier said that the EU will be very demanding for a level playing field with the UK during the Brexit negotiations, which further added to market concerns about a no-deal Brexit.
Hence, any subsequent positive move seems more likely to meet with some fresh supply at higher levels, rather fizzle out quickly and might still be seen as an opportunity for bearish traders to initiate fresh positions.
Technical levels to watch