GBP/USD pares majority of early gains, steadies above 1.2900
- GBP/USD staged a rebound after testing 1.2900 on Thursday.
- US Dollar Index clings to modest daily gains near 93.70.
- Investors remain focused on Brexit headlines, US stimulus talks.
The GBP/USD pair spent the first half of the day moving sideways near 1.2900 but gained traction during the European session. After advancing to a daily high of 1.2970, however, the pair struggled to preserve its bullish momentum and erased a large portion of its daily gains. As of writing, GBP/USD was up 0.07% on the day at 1.2927.
Earlier in the day, European Council President Charles Michel noted that coming days will be crucial with regard to Brexit talks and added that they need significant steps from the UK to reach a deal. Meanwhile, Bank of England (BoE) Governor Andrew Bailey said that the post-Brexit transition period will be challenging for the economy and reiterated that risks are "very much to the downside."
DXY recovers modestly in American session
On the other hand, the US Dollar Index (DXY), which declined to a daily low of 93.50, staged a technical correction in the American session and made it difficult for the pair to edge higher. At the moment, the DXY is up 0.08% on the day at 93.68.
The only data from the US showed on Thursday that Initial Jobless Claims declined by 9,000 to 840,000 in the week ending October 3rd but failed to trigger a significant market reaction. Meanwhile, US House Speaker Nancy Pelosi said that they are unlikely to support a standalone airline bill without a comprehensive COVID relief bill. If US lawmakers struggle to pass standalone bills to support the economy, safe-haven flows could start dominating markets and weigh on GBP/USD.
Technical levels to watch for