The USD strengthened a bit during the early European session and dragged the GBP/USD pair to fresh daily lows, below the 1.3800 mark in the last hour.
The pair witnessed some selling during the first half of the trading action on Tuesday and eroded a part of the previous day's strong move up to over one-week tops. The intraday pullback was exclusively sponsored by a goodish pickup in demand for the US dollar amid a fresh bout of the risk-aversion trade.
Worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery continued weighing on investors' sentiment. This was evident from a sharp fall in the US equity futures, which drove some haven flows towards the greenback and exerted some pressure on the GBP/USD pair.
This comes on the back of the recent Brexit-related developments, wherein the UK Prime Minister Boris Johnson rejected the EU's attempt to iron out problems with the post-Brexit arrangements for Northern Ireland. It is worth mentioning that the UK had insisted to renegotiate the Northern Ireland Protocol of the withdrawal agreement signed last year.
With the latest leg down, the GBP/USD pair, for now, seems to have stalled its recent strong rebound from the lowest level since early February touched last week. In the absence of any major market-moving economic releases from the UK, the GBP/USD pair remains at the mercy of the USD price dynamics and any Brexit-related headlines.
Later during the early North American session, traders might take cues from the US economic docket – highlighting the releases of Durable Goods Orders and the Conference Board's Consumer Confidence Index. This, along with the broader market risk sentiment and developments surrounding the coronavirus saga, will influence the USD price dynamics.