GBP/USD flirting with lows, around 1.3120 level

   •  Fails to benefit from a modest USD weakness.
   •  Cautious ahead of Brexit transition deal terms.
   •  Progress over the US tax bill also in focus.

The GBP/USD pair failed to build on overnight rebound and is currently retesting the 1.3120-15 immediate support area.

Currently trading around 1.3125-30 region, the pair once again met with some fresh supply near the 1.3175-80 region and failed to benefit from a mildly softer tone around the US Dollar. 

Renewed concerns over the long-awaited US tax reform bill kept the USD on the back-foot but did little to provide any fresh bullish impetus to the major.

Moreover, traders turned cautious and seemed inclined to lighten their bullish bets as EU diplomats start the discussion over a Brexit transition terms, expected to be outlined later today.

The pair's downslide through the mid-European session could also be attributed to some cross-driven weakness, led by a sharp rebound witnessed around the EUR/GBP cross.

In the absence of any relevant macroeconomic data, investors would remain focused on any fresh Brexit news and progress over the US tax bill.

   •  GBP/USD attention remains on 1.3050 – Commerzbank

Technical levels to watch

A follow-through selling pressure could drag the pair back towards the 1.3100 handle, which if broken could extend the downslide towards retesting 1.3040 support area. On the upside, momentum above 1.3175-80 hurdle might now lift the pair beyond the 1.3200 handle towards testing the key 1.3225-30 supply zone, also nearing 50-day SMA.