GBP / USD falls to week-long lows below 1.3000 amid notable USD demand

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  • GBP / USD comes under new selling pressure on Wednesday and renews weekly lows.
  • Nervousness over the coronavirus drives safe-haven monetary flows into the USD and puts heavy pressure on the pair.
  • Brexit-related uncertainties weigh on the GBP and further increase the selling bias in the pair.

The pair GBP/USD has seen strong sales at the start of the European session on Wednesday and has fallen sharply below the key psychological level of 1.3000, reaching new weekly lows. At the time of writing, the pair remains close to daily lows in the 1.2965-70 region and bearish pressure intact.

The pair has struggled to gain significant traction and has been limited by a combination of factors. The deadlock over future access of EU fishing fleets to UK waters it has clouded the prospects for immediate progress in the Brexit negotiations. This, in turn, has taken its toll on the pound sterling.

On the other hand, the US dollar has benefited from some safe haven cash flows amid growing market concerns about alarming growth in cases of coronavirus in the US and Europe. Investors appear concerned that renewed lockdown measures to curb the second wave of COVID-19 could prove detrimental to the already fragile global economy.

Apart of this, disappointment about the next round of fiscal stimulus measures in the US and political uncertainty in the country have affected global risk sentiment. This has been evident by a sharp drop in stock market futures, forcing investors to take refuge in traditional safe-haven assets and providing an additional boost to the USD.

With the latest move down, the GBP / USD pair now appears to have found acceptance below the 200 hourly SMA and appears vulnerable to extending the decline. Therefore, some continuing weakness towards intermediate support near the 1.2945 level, en route to the round 1.2900 level, seems like a clear possibility amid the absence of relevant economic releases.

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Credits: Forex Street

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