GBP / USD clings to modest gains around the 1.3020 region

• GBP / USD reverses an initial decline near the 1.3000 level.
• The rally is solely due to a slightly softer tone around the safe-haven USD.
• Coronavirus fears and Brexit uncertainties could limit any positive movement for the British pound.

The pair GBP/USD clings to modest gains around the region of 1.3020-30 at the start of the European session on Tuesday. The pair has recovered around 40 pips from the lows of the Asian session, close to the 1.3000 level, although it has remained capped below 1.3045.

The pair has continued to show some resistance below the key psychological level of 1.3000, where the 200 hourly SMA is located, and has gained some positive traction on Tuesday. The GBP / USD pair, for now, seems to have broken three consecutive days of losing streak and has halted its recent pullback from the 1.3175 region amid a slightly softer tone around the US dollar.

The USD has struggled to hold onto its initial gains despite rising market concerns over continued increase in new coronavirus cases and fears of stricter lockdown measures, which could be detrimental to the already fragile global economic recovery. The uncertain political situation of the United States seems to be the only factor keeping USD bulls on the defensive.

Meanwhile, the fact that the EU chief negotiator, Michel Barnier, who will delay his return to Brussels and is expected to remain in the UK until Wednesday has raised hopes for a Brexit deal last minute. Nonetheless, incoming Brexit related news will continue to play a key role in influencing sterling price dynamics and influencing the GBP / USD pair.

There are no major economic data releases in the UK. In the US economic calendar, the publication of data on durable goods orders stands out, which will be released at the beginning of the American session. This, along with broader market risk sentiment, will help investors seize some significant opportunities on Tuesday.