GBP/USD refreshes daily low, 1.3200 back in sight amid resurgent USD demand

• GBP/USD witnessed an intraday turnaround from the vicinity of the 1.3300 mark on Tuesday.
• Hawkish Fed expectations continued underpinning the USD and exerted pressure on the pair.
• Some follow-through selling below the 1.3200 mark will set the stage for additional losses.

The USD caught some bids during the early North American session and dragged the GBP/USD pair to a fresh daily low, around the 1.3220-15 region in the last hour.

The pair struggled to capitalize on its modest intraday gains, instead met with a fresh supply near the 1.3290 area on Tuesday amid a modest pickup in the US dollar demand. Growing market acceptance that the Fed would hike interest rates sooner rather than later to contain stubbornly high inflation continued acting as a tailwind for the USD.

Apart from this, a further recovery in the US Treasury bond yields underpinned the buck and exerted downward pressure on the GBP/USD pair. Bulls failed to gain any respite from the prevalent risk-on mood – which tends to undermine the safe-haven greenback – and largely shrugged off the prospects for an imminent rate hike by the Bank of England.

With the latest leg down, the GBP/USD pair has now eroded a major part of the overnight recovery gains and moved well within the striking distance of the 1.3200 mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and set the stage for additional losses amid persistent Brexit-related uncertainties.

In the absence of any major market-moving economic releases, the USD price dynamics will continue to play a key role in influencing the GBP/USD pair and produce some short-term trading opportunities. Traders will further take cues from the US bond yields, developments surrounding the coronavirus saga and the broader market risk sentiment.

Technical levels to watch