GBP/USD holds steady above 1.3400 mark, lacks follow-through

• Brexit woes failed to assist GBP/USD to capitalize on its early modest uptick to multi-day highs.
• Modest USD weakness helped limit the downside as investors await Brexit-related developments.

The GBP/USD pair witnessed some selling during the early European session, albeit lacked follow-through and so far, has managed to hold above the 1.3400 mark.

The pair built on Friday's recovery move from the 1.3350 area, or YTD low and gained some traction during the early part of the trading activity on the first day of a new week. The uptick was sponsored by a further US dollar pull back from 16-month highs, triggered by data showing that the US consumer sentiment plunged to a 10-year low in November.

The greenback was further pressured by a fresh leg down in the US Treasury bond yields, though a combination of factors helped limit deeper losses. Investors seem convinced that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation. This, along with the cautious mood, acted as a tailwind for the safe-haven USD.

On the other hand, the risk that the UK government could trigger Article 16 of the Northern Ireland Protocol held bulls from placing aggressive bets around the British pound. This was seen as another factor that failed to assist the GBP/USD pair to capitalize on its modest intraday uptick, rather prompted fresh selling around the 1.3440 region.

Meanwhile, the downside remains cushioned as investors await fresh developments surrounding the Brexit saga amid absent relevant macro data from the UK. Later during the early North American session, traders will take cues from the Empire State Manufacturing Index. This, along with the US bond yields, might influence the USD and provide some impetus to the GBP/USD pair.

Technical levels to watch