GBP/USD retreats from 6-week tops, back below 1.3100 mark

• GBP/USD gained some positive traction during the early part of Monday’s trading action.
• Bulls faced rejection near 1.3200 mark, albeit weaker USD helped limit any deeper losses.

The GBP/USD pair faded an intraday bullish spike to the 1.3200 mark, or six-week tops, and retreated to the lower end of its daily trading range.

Following a brief consolidation through the early part of Monday's trading action, the pair regained positive traction during the early European session and built on its recent recovery move from YTD lows set on February 28.

GBP/USD supported by weaker USD

In absence of any negative Brexit-related headlines, the intraday uptick to the highest level since late January was sponsored by the prevailing strong bearish sentiment surrounding the US dollar and thus, lacked any strong follow-through.

A massive rout in oil prices added to fears over the economic fallout from the coronavirus outbreak and triggered a fresh wave of the global risk sentiment. This was evident from a selloff across equity markets and boosted demand for traditional safe-haven assets.

Against the backdrop of the global flight to safety, firming expectations that the Fed will deliver another 50 bps rate cut on March 18 led to a steep decline in the US Treasury bond yields and exerted some additional downward pressure on the USD.

Bulls, however, failed to capitalize on the move and faced rejection near the 1.3200 round-figure mark. The pair quickly retreated around 150 pips from intraday swing highs and for now, seems to have stabilized near the 1.3100 mark.

In absence of any major market-moving economic releases, the broader market risk-sentiment might continue to play a key role in influencing the USD price dynamics and produce some meaningful trading opportunities on the first day of a new week.

Technical levels to watch