GBP / USD falls back to 1.3300 amid tight forex market conditions

• GBP / USD has dropped to 1.3300 in recent trading, around which it is currently consolidating.
• There appears to be no new news to fuel the move, although there has been widespread pessimistic sentiment regarding Brexit negotiations this week.

No new news is driving the movement, but the GBP/USD it has returned to the lows for the day and briefly fell below 1.3300 for the first time since Monday. Although price action is now consolidating above the psychological level again, the pair appears to be testing this area with more aggression than before, something that will likely make bears uncomfortable about a breakout to the downside.

As a reminder, market conditions are poor given the absence of the majority of US participants due to a second day of Thanksgiving celebrations. Although typically a precursor to range trading, a lack of market depth can leave assets vulnerable to big moves.

Brexit pessimism (there was no indication today that the EU and UK have moved closer to a deal this week) is likely behind today’s slide. In fact, the British pound is by far the worst performing G10 currency today, down 0.4% against the US dollar on the day against the AUD, NZD and EUR, which are trading 0.45 against the US dollar. .

In tight liquidity conditions, only a few major bearish orders are needed to drive the pair lower, and that is likely to have been the case today, with month-end flows likely to be a factor working against it as well. the pound sterling.

GBP / USD testing the bottom of this week’s range and looking heavy

GBP / USD’s move lower to 1.3300 has pushed the pair back to the bottom of the ranges of the past few days. For now, the pound remains at support in this area, but if it were to now descend from the bottom of this week’s range that would open the door for a move lower towards Monday’s low just above 1.3260 and then towards the lower. Low of last Thursday around the psychological 1.3200.

However, some may view this recent downward movement as another opportunity to buy on the dips, in which case GBP / USD could rise again. In this scenario, the main levels to watch would be Friday’s highs at 1.3380 and this week’s highs around 1.3400.

One hour chart