GBP/USD slumps to two-week lows near mid-1.29s as risk aversion dominates
- Trade tension escalates as China retaliates.
- Wall Street and 10-year US T-bond yield extend slide on Monday.
- A new round of Brexit talks between the government and Labour to take place today.
The British pound failed to capitalize on the broad-based USD weakness earlier in the day and pushed lower as the greenback started to recover its early losses. The GBP/USD pair, which touched its lowest level in two weeks at 1.2948, was last seen trading at 1.2950, losing 0.38% on a daily basis.
Earlier today, China announced its decision to hike tariffs on $60 billion worth of American imports despite President Trump's warnings, escalating the trade tension and weighing on the market sentiment. Although the initial market reaction hurt the demand for the greenback, the flight-to-safety forced the risk-sensitive GBP to suffer heavy losses against its rivals and didn't allow the pair to gain traction.
After testing the 97 handle, the US Dollar Index erased its losses and was virtually unchanged on the day at 97.30, causing the pair to remain under strong bearish pressure.
Confirming the dismal mood, the 10-year T-bond yield is down more than 2% and Wall Street is having one of its worst days of the year with the Nasdaq Composite losing more than 3% on a daily basis.
Meanwhile, the lack of political developments in the UK hinting that the government and the Labour party is moving closer to a Brexit deal doesn't help the pound sterling either. Earlier today, British Prime Minister Theresa May's spokesman told reporters that a new round of cross-party talks was scheduled to take place later today.
Technical levels to consider