GBP/USD witnessed some heavy selling

The GBP/USD pair dropped to five-and-half-month lows during the mid-European session, with bears now awaiting sustained break below the 1.3600 round-figure mark. The pair prolonged its recent downward trajectory from levels just above the 1.3900 mark and witnessed some follow-through selling for the fourth consecutive session on Tuesday. This also marked the sixth day of a negative move in the previous six days and was sponsored by a combination of factors. The British pound was weighed down by Brexit woes amid reports that the UK will threaten this week to deviate from the Northern Ireland Protocol of the Brexit deal. Sources indicated that UK chief Brexit negotiator, David Frost, is set to unveil the government's proposed changes to the protocol.

Adding to this, a surge in infections in the UK caused largely by the highly contagious Delta variant of the coronavirus acted as a headwind for the sterling. In fact, UK reported 39,950 new COVID-19 cases, which, along with a modest US dollar strength, exerted pressure on the GBP/USD pair. Investors remain worried about the potential economic fallout from fresh COVID-19 outbreaks. This was seen as a key factor that continued underpinning the safe-haven greenback, which got an additional boost from a goodish rebound in the US Treasury bond yields from multi-month lows. Meanwhile, diminishing odds for an imminent Fed action in the near future held the USD bulls from placing aggressive bets. Moreover, slightly oversold conditions on intraday charts might extend some support to the GBP/USD pair and help limit any further losses, at least for the time being.