- Markets worried about increased chances of no-deal exit of the UK from the EU.
- USD selling helps GBP/USD.
- Bears on the prowl to sell at a higher level.
The British pound fell to a six-week low against the dollar on Wednesday as the worries about the Brexit negotiations heightened. The fall accelerated after news about draft legislation in the UK inconsistent with international laws spiked the chances of no-deal Brexit at the end of the current negotiation phase.
The pair came back intraday after falling to below 1.2900 levels – the bounce-back helped by some fresh selling seen in US dollars. The greenback lost sheen as the equity market surges helped relieve the risk-off mood, sidestepping the pessimistic news regarding the coronavirus vaccine.
The bounce-back triggered some desperate short-covering, and the major currency pair regained more than 135-140 pips. The GBP/USD was trading steady today above the critical psychological level of 1.3000.
The Brexit headlines will be dictating trading terms in the sterling for the day as the UK economic docket is light. The ECB monetary policy might drive some action mostly on correlation with the cross pairs. In the US calendar, the traders will keep an eye on initial weekly jobless claims.