GBP / USD capped below 1.3200 after retracement from 1.3245

• GBP / USD retreats below 1.3200 after failing at 1.3245.
• Brexit uncertainty is weighing on demand for GBP.
• The pound could extend its downtrend to 1.3000 or below – Commerzbank.

The rebound of the British pound from lows of 1.3100 last week it has been rejected from 1.3245 in early trading on Monday and the pair fell to 1.3170 before consolidating in a tight range below 1.3200 during the US trading session.

The pound sinks with all eyes on Brexit

Investors remain cautious about long bets on the pound, despite the positive market sentiment, amid concerns about the lack of progress in the Brexit talks. Although negotiations are still continuing and hopes for a deal have risen, positions appear still far apart on key issues with only six weeks to go until the December 31 deadline.

The pound has not taken advantage of market optimism sparked by better-than-expected Chinese industrial production data and by drugmaker Moderna that announced that its COVID-19 vaccine is 94% effective. This is the second shot to report promising test results in less than a week and the stock markets have responded with a positive session that has been largely ignored by major currency crosses.

In the absence of relevant macroeconomic data on the UK macroeconomic calendar, the speeches by Bank of England officials Teneyro and Haskel have had no relevant impact on the British pound.

GBP / USD at risk of a dip towards 1.3000 and 1.2920 – Commerzbank

The pound’s current downtrend from 1.3300 could extend to 1.3000 or even lower, says Karen Jones, FICC Technical Analysis Research Team Leader at Commerzbank: “Last week GBP / USD rebounded and failed in the retracement of the 78.6% at 1.3310 and is expected to fail shortly. Close support is offered by the 55-day moving average at 1.3000 and also at 1.2922 by the 5-month uptrend. We would allow ourselves to think of a drop there in the short term. ”

Technical levels