- GBP/USD meets with some fresh supply and erodes a part of Friday’s positive move.
- Fears of a no-deal Brexit kept a lid on any follow-through positive move for the GBP.
- The prevailing risk-off mood benefitted the USD and added to the intraday selling bias.
The GBP/USD pair finally broke down of its Asian session consolidation phase and dropped to fresh session lows, around the 1.2915 region in the last hour.
The pair failed to capitalize on Friday’s goodish intraday positive move of around 100-pips from the vicinity of YTD lows and came under some fresh selling pressure on the first day of a new trading week.
GBP/USD weighed down by a combination of factors
The pair remained capped below the key 1.30 psychological mark as investors refrained from placing bullish bets amid persistent fears that Britain might crash out of the European Union later this year.
This coupled with a fresh wave of the global risk-aversion trade provided a goodish lift to the US dollar’s perceived safe-haven status against its British counterpart and added to the intraday selling bias.
The risk-sentiment took a sharp knock on Monday in the wake of growing market concerns that the global economic growth could take a hit from the outbreak of the deadly coronavirus.
Market worries were further fueled by weekend reports, indicating a sharp rise in the number of confirmed coronavirus cases in the north of Italy, which led to a bearish gap opening on Monday.
Meanwhile, the risk-off mood-led slump in the US Treasury bond yields seemed to keep a lid on any runaway USD rally and might eventually help limit deeper losses, at least for the time being.
In absence of any major market-moving economic releases, either from the UK or the US, the incoming Brexit headlines will play a key role in influencing the sentiment surrounding the sterling.
This along with investors’ appetite for perceived riskier assets might provide some impetus and contribute towards producing some short-term trading opportunities on Monday.
Technical levels to watch