GBP/USD rebounds swiftly from multi-week lows, still in the red around mid-1.2900s

• GBP/USD pair remained depressed for the sixth consecutive session on Wednesday.
• Worries about Brexit trade negotiations continued undermining the British pound.
• A modest USD pullback from highs prompted some intraday short-covering move.

The GBP/USD pair rallied around 100 pips in the last hour, albeit lacked any strong follow-through and remained capped below the key 1.3000 psychological mark.

The pair prolonged its recent sharp retracement slide from YTD tops and continued losing ground through the mid-European session on Wednesday. The selling bias picked up pace after the UK set out its blueprint for life outside the European Union. The UK internal market bill acknowledged that some powers conferred by the legislation might be inconsistent with international law.

The pair dived to the lowest level since July 28, around the 1.2885 region, and was further pressured by sustained US dollar buying interest. The USD, however, struggled to preserve its early gains to multi-week tops, instead witnessed an intraday turnaround, which, in turn, prompted some short-covering move around the GBP/USD pair amid near-term oversold conditions.

Meanwhile, growing fears that the UK will crash out of the European Union at the end of the transition period on December 31 kept the GBP bulls on the defensive and capped any meaningful recovery the GBP/USD pair. This makes it prudent to wait for a sustained move beyond the 1.3000 mark before positioning for an extension of the intraday recovery move.

In the absence of any major market-moving economic releases, the incoming Brexit-related headlines will continue to play a key role in influencing the GBP price dynamics. Hence, the focus now shifts to the UK Prime Minister Boris Johnson's press conference at 15:00 GMT.

Technical levels to watch