- A modest pickup in USD demand triggers further selling around GBP / USD on Tuesday.
- Concerns about the increase in the number of COVID-19 cases are driving safe-haven monetary flows towards the dollar.
- Investors could refrain from opening aggressive positions and wait for further updates on Brexit.
The pair GBP / USD remains under pressure at the start of the European session on Tuesday, staying close to daily lows around the 1.3325 level, although it lacks continuation.
The pair has been unable to capitalize on the previous day’s solid late bounce from the 1.3225 region, at two-week lows, and has encountered fresh selling during the early part of Tuesday’s trading action. As investors await further Brexit-related updates, a modest pickup in demand for the US dollar has been considered one of the key factors putting some pressure on the GBP / USD pair.
It’s worth remembering that the pair witnessed some aggressive selling on Monday in reaction to incoming Brexit news. According to the news, the EU’s main Brexit negotiator, Michel Barnier, was very pessimistic about the possibility of sealing a new agreement trade with the UK and said the three key outstanding issues remain open.
However, the British pound managed to cut its losses following the news that the British prime minister, Borish Johnson will travel to Brussels in a last-ditch effort to strike a post-Brexit trade deal. Johnson and the President of the European Commission, Ursula von der Leyen, will seek common ground on the remaining significant differences: a level playing field, governance and fisheries.
Meanwhile, the support factor, to some extent, was offset by increasing Market Concerns About Continued Increase in New COVID-19 Infections. This, in turn, hurt investor sentiment and triggered some safe haven flows to the dollar. However, the increased odds of further US fiscal stimulus measures could prevent dollar bulls from opening new positions and limit the pair’s rise.
There is no major economic data release on Tuesday, neither from the UK nor from the US Therefore, investors will closely follow developments around Brexit, which should continue to play a critical role in boosting sentiment short. term around the British pound and instill some volatility in the GBP / USD pair.
GBP / USD technical levels
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