Sterling slumped below 1.3000, outpacing other major currencies on the way down as UK-specific issues returned to center stage ahead of this week's BoE meeting.
GBP/USD backed off Europe session highs by 1.3108 as traders wondered whether Thursday's BoE meeting would provide clues as to whether policy makers might cut rates below zero at a later date to jumpstart the UK economy.
Sterling bulls had shrugged off negative-rates speculation and the EU-UK trade negotiations impasse as they rallied the pound to Friday's trend high at 1.3170, a touch below its pre-coronavirus peak of 1.3200 struck on March 9.
Whether GBP/USD should be trading near pre-pandemic highs remains an open question.
Friday's 1.3170 high appears to be a top for now, and a break below 10-day moving average support at 1.2932 would facilitate tests of multiple DMAs down to the 100-DMA by 1.2443.
Without a vaccine or trade talk progress, GBP/USD bulls need non-UK help.
However, the two main determinants of recent dollar weakness -- China trade angst and rising U.S. COVID cases -- risk derailing UK growth if they persist.
For more click on FXBUZ
GBP Chart: Click here