GBP/USD failed to capitalize on its early uptick, instead met with some fresh supply at higher levels. A goodish pickup in the USD demand was seen as a key factor exerting some pressure on the major. Investors now await updates on the EU-UK Brexit negotiations before placing fresh directional bets.
A sudden pickup in the USD demand dragged the GBP/USD pair back below the 1.3200 round-figure mark during the early European session.
The pair once again struggled to capitalize on its early uptick to levels beyond mid-1.3200s and witnessed a modest intraday pullback from the vicinity of YTD tops. As investor looked past Friday's upbeat UK monthly Retail Sales figures, the emergence of some fresh buying around the US dollar was seen as one of the key factors that exerted some pressure on the GBP/USD pair.
A turnaround in the global risk sentiment – as depicted by a modest pullback in the equity markets – extended some support to the greenback's relative safe-haven status. With the USD price dynamics turning out to be an exclusive driver of the GBP/USD pair's momentum, bulls largely shrugged off better-than-expected UK flash Manufacturing and Services PMI prints for August.
It will now be interesting to see if the pair is able to attract any dip-buying at lower levels or extends its intraday rejection slide from the 1.3255-65 supply zone. Investors now look forward to the EU chief negotiator, Michel Barnier's press conference, where updates on the latest round of the EU_UK negotiations might infuse some volatility around the GBP crosses.