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GBP / USD quickly recovers from 1-week lows, still bearish below 1.3000

  • GBP / USD found some support before 1.2900 and witnessed a short hedging move.
  • A broad-based USD strength and Brexit uncertainties kept the pair’s recovery attempt limited.

The pair GBP/USD It rallied around 100 pips from daily lows, although it appears to be struggling to find acceptance above the 1.3000 key psychological level.

The pair extended its recent pullback from the 1.3175 region and continued to lose ground during the middle of the European session on Wednesday. The steep decline marked the fourth day of a negative move and was solely sponsored by a widespread strength in the US dollar.

Investors remain concerned that the imposition of new lockdown measures to curb the second wave of COVID-19 infections could hamper the tepid global economic recovery. This, in turn, took its toll on global risk sentiment and sparked a selloff in equity markets.

The flow of risk aversion provided a strong boost to the safe haven dollar, which was seen as one of the key factors that continued to put some pressure on the GBP / USD pair. USD bulls did not appear to be affected by the uncertainty about the outcome of the US elections.

It’s worth reporting that polls have been indicating an advantage for Democratic candidate Joe Biden over current President Donald Trump. Investors, however, remain cautious due to a narrow gap in key swing states and the possibility that the outcome will be contested.

On the other hand, the British pound was undermined by lingering Brexit-related uncertainties amid stalemate on the question of future access of EU fishing fleets to UK waters. This, coupled with some technical selling below the 1.2990 level, compounded the intraday downward pressure.

However, the GBP / USD pair managed to find some support before the 1.2900 level and witnessed an aggressive short-hedging move during the early North American session. The rebound attempt lacked an obvious fundamental catalyst and is more likely to remain limited.

Credits: Forex Street

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