- GBP/USD was under pressure for the 3rd straight session on Monday.
- Ongoing Brexit uncertainty pressurised the Pound
- Risk-off trading boosted safe-haven USD dragging on the pair.
The GBP/USD briefly slipped through 1.3000, the key psychological mark during the early European session. The move lacked follow through and quickly recovered.
GBP/USD extended last week’s retracement decline from the 1.3175, seeing some follow-through selling for the third straight session on Monday. The Pound was weighed down by ongoing Brexit uncertainties, which combined with a pickup in demand for the US dollar exerted pressure on GBP/USD.
Despite Brexit talks restarting and reported progress on state aid rules, investor doubts remain over whether the two sides can overcome their differences on fisheries. The EU’s chief Brexit negotiator, Michel Barnier warned last week that there will be no trade deal without a fair solution for fisheries.
Meanwhile, the greenback was boosted by safe haven inflows which added to the selling bias on GDP/USD. Concerns over a second wave of coronavirus infections and the negative impact that it could have on the fragile economic recovery weighed on investors’ sentiment, which lifted safe-haven assets and currencies.
Growing expectations that US lawmakers will be able to reach an agreement prior to the US presidential election on November 3 further underpinned the greenback. Expectations of a strong Democratic victory in the US Presidential elections prevented USD bulls from placing aggressive bets, offering some support to the GBP/USD pair.
Given the quiet UK economic calendar Brexit-related headlines will continue driving the sentiment around the pound. The US economic calendar sees the release of New Home Sales data, which, together with the broader market risk sentiment, will influence the USD.