GBP/USD pares intraday losses, holds steady above 1.3500 mark

• GBP/USD witnessed some long-unwinding on the first day of a new trading week.
• A modest USD rebound exerted some additional downward pressure on the pair.
• Thin liquidity held investors from placing aggressive bets and helped limit losses.

The GBP/USD pair quickly recovered around 40-50 pips from daily swing lows and was last seen trading with modest losses above the key 1.3500 psychological mark.

The pair failed to capitalize on its early uptick, instead met with some supply near the 1.3575 region and extended the previous sessions' pullback from the vicinity of YTD tops. As investors looked past the post-Brexit trade deal optimism, investors seemed inclined to lighten their bullish bets around the British pound amid a subdued trading action.

The intraday retracement slide picked up pace since the early European session and dragged the GBP/USD pair to an intraday low level of 1.3474. A goodish US dollar rebound – supported by recovering US Treasury bond yields – exerted some downward pressure on the major, through the downside remained limited amid the prevalent risk-on environment.

The global risk sentiment got a fresh lift on the first day of a new trading week after the US President Donald Trump signed a $2.3 trillion pandemic aid and spending package on Sunday. The bill restores unemployment benefits to millions of Americans and averted a federal government shutdown, which, in turn, boosted investors' confidence.

Apart from this, relatively thin trading volumes held investors from placing any aggressive bets and extended some support, rather assisted the GBP/USD pair to rebound swiftly from daily swing lows. The pair now seems to have stabilized near the 1.3500 mark and remains at the mercy of the USD price dynamics amid absent relevant fundamental catalyst.

Meanwhile, developments surrounding the coronavirus saga could infuse some volatility in the financial markets. This might provide some impetus and assist traders to grab some short-term opportunities.

Technical levels to watch