GBP/USD struggles for direction, holds steady above 1.3000 mark
- The prevalent selling bias around the USD extended some support to the GBP/USD.
- Persistent Brexit-related uncertainties kept a lid on any strong gains for the major.
- ECB decision might infuse some cross-driven volatility and provide some impetus.
The GBP/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early European session.
The pair failed to capitalize on the previous day's sharp intraday recovery of around 135-140 pips from six-week lows and remained confined in a range, around the key 1.3000 psychological mark. The downside remains cushioned amid the prevalent selling bias around the US dollar, which remained depressed on the back of a modest pickup in the demand for the shared currency.
The supporting factor, to a larger extent, was negated by worries about Brexit trade negotiations. This, in turn, held the GBP bulls from placing any aggressive bets and kept a lid on any strong gains for the GBP/USD pair. In fact, the UK government’s so-called internal market bill admitted that some powers conferred by the legislation might be inconsistent with international law.
The draft legislation drew wide criticism and increased the possibility of a no-deal Brexit at the end of the transition period. As RTE reports, the UK government's attempt to override elements of the NI Protocol is a “clear breach” of the Brexit Withdrawal Agreement and would allow the European Commission to take legal action on several grounds.
Market participants now look forward to the much-awaited ECB monetary policy decision, which might infuse some cross-driven volatility in the GBP/USD pair. This, along with fresh Brexit-related developments, will influence the GBP price dynamics and produce some meaningful trading opportunities amid absent relevant market moving economic releases from the UK.
Technical levels to watch