European currencies continue to trade lower after a decline last week amid a mixed risk sentiment and the lingering Brexit-related fears. As such, GBPUSD accelerated losses after a break below the 1.30 key support area and dipped to fresh three-week lows around 1.2930. By the way, the pair has been nursing losses for a sixth day in a row already.
The selling pressure renewed after earlier recovery attempts failed in the 1.3030 zone amid a pickup in broader dollar demand. Late last week, the greenback derived some support from decent economic data out of the United States, where the final Q3 GDP growth figures came in line with expectations and the University of Michigan’s consumer confidence index was revised higher. Personal consumption figures were fairly positive as well and helped to ease recession concerns further.
Still, the key bearish driver for sterling is the reemerged threat of a no-deal Brexit. GBPUSD had to give up all its post-election gains after Prime Minister Boris Johnson set a hard deadline of December 2020 to agree a trade deal with the EU. Such a position has led to a rise in concerns over a chaotic exit of an agreement between the UK and the US isn’t reached. As long as these worries persist, the pound will likely remain under pressure. The technical picture also points to the downside risks, as a break below the 1.30 psychological support serves as a bearish signal for traders.
As for EURUSD, the pair continues to trade lower after a plunge on Friday but still manages to hold above the 100-DMA around 1.1060. The prices struggled to confirm a break above the 200-daily moving average last week and turned negative, showing some signs of a bearish extension now. Dollar demand coupled with subdued risk sentiment dent the appeal of the common currency which needs to regain at least the 1.11 figure to see a relief rally. Still, in a thin pre-holiday trading, the prices may settle in a limited range for the time being, with selling pressure will likely persist at this stage.