• USD weakness lifted GBP/USD higher on Tuesday.
  • US political uncertainty saw USD bulls to ease back on their positions ahead of the elections.

Brexit headlines capped  gains

GBP/USD pushed higher in the mid-European session, trading a three-day high around the key 1.3000 psychological level

The pair has now recovered around 150 pips from a two-week low,1.2850s hit in the previous session. The Pound slumped on Monday as it reacted to news of a second nationwide lockdown in the UK. However, revived optimism for a last-minute Brexit deal eased the bearish pressure and capped further losses.

Meanwhile, the US dollar cane under pressure as long trades were unwound, pulling the greenback down from its one-month high. USD buyers eased back on their positions amid rising caution over the US presidential election. This also boosted GBP/USD, although incoming Brexit headlines capped the upside.

According to Reuters, the EU and the UK have failed to agree on fishing waters, level the playing field and resolve differences over state aid. Even so, the fact that they are still talking is being interpreted as a good sign.

Brexit developments will remain in focus which will drive sentiment surrounding the sterling. Repositioning ahead of the US election could inject some volatility.