GBP/USD turns south after rejection at 1.3290, ignores market optimism

• GBP/USD stalls its rebound just shy of 1.3300 in the European session.
• The US dollar drops amid an upbeat market mood while yields hold firmer.
• Rising Omicron cases in the UK offset encouraging Brexit news.

GBP/USD is paring back gains while heading towards 1.3250 in the European session, as rising cases of the new Omicron covid variant in the UK overshadows the broader market optimism.

The pound bears the brunt of the unstoppable growth in new infections, with 336 confirmed cases of the highly-mutated variant across the UK on Monday, a rise of 90 from Sunday.

The UK Health Secretary Sajid Javid said that “there is community transmission of the Omicron coronavirus variant in multiple regions of England.”

In light of this, cable traders have failed to capitalize on the prevalent risk-on sentiment, fuelled by the Chinese stimulus measures and easing fears over the new covid strain worldwide.

Markets have also ignored the latest positive developments on the Brexit front, as well as, the encouraging comments from the UK drugmaker GlaxoSmithKline.

The pharma giant said that the data was built on a promising signal published last week, underscoring the importance of Sotrovimab for the early treatment of COVID-19.

On the latest Brexit update, the UK is expected to offer France an olive branch to resolve the fishing row, per The Telegraph. British sources said an agreement could be reached on ‘replacement boats’, which would allow issuing of more permits to EU vessels.

Looking ahead, the Omicron stats from the UK will be closely eyed amid a data-dry calendar. The dynamics in the yields and the dollar could also impact the major.

GBP/USD: Technical levels to consider