GBP/USD struggles near weekly lows, just above mid-1.2800s
- GBP/USD failed to capitalize on its early uptick, instead met with some fresh supply.
- Negative Brexit-related headlines weighed on the sterling and exerted some pressure.
- A subdued USD price action helped limit losses ahead of the FOMC meeting minutes.
The GBP/USD pair extended its steady intraday retracement slide and refreshed weekly lows, around mid-1.2800s during the mid-European session.
The pair failed to capitalize on its early uptick to the 1.2930 region, instead met with some fresh supply and extended the overnight rejection slide from the key 1.3000 psychological mark, or four-week tops. The British pound was weighed down by negative Brexit-related headlines, indicating that significant gaps remain between the UK and the EU on the post-Brexit trade deal.
Irish Foreign Minister Simon Coveney was out with some comments and said that the European Union (EU) Chief Brexit Negotiator Michel Barnier will not agree on intensified negotiations unless the UK moves its stance on state aid. Coveney said that level playing field is a really serious issue and added that a landing zone on fishing is hard to envisage.
However, a subdued US dollar demand – amid the prevalent upbeat market mood – extended some support to the GBP/USD pair and helped limit deeper losses, at least for the time being. The market reaction to the US President Donald Trump's surprise decision to end negotiations with Democrats on economic stimulus package turned out to be short-lived. This was evident from a rebound in the equity markets, which undermined the greenback's relative safe-haven status.
From a technical perspective, the GBP/USD pair on Tuesday confirmed a bearish breakthrough 100-hour SMA and a one-week-old ascending trend-line confluence support. Hence, some follow-through weakness towards the 1.2800 mark, en-route 100-day SMA, now looks a distinct possibility.
Moving ahead, market participants now look forward to the release of the FOMC monetary policy meeting minutes. This, along with the broader market risk sentiment will influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch