GBP/USD recovers a part of early lost ground to 29-month lows, above mid-1.2100s

• The GBP remains heavily offered amid growing fears of a no-deal Brexit.
• Highly oversold conditions prompt some intraday short-covering move.
• The prevalent USD bullish sentiment might keep a lid on any strong gains.

The GBP/USD pair trimmed a part of its early lost ground and managed to recover over 50-pips from near 29-month lows set earlier this Tuesday.

The pair added to its overnight dramatic fall and remained under some intense selling pressure through the Asian session amid persistent Brexit-related uncertainties, further fueled by reports that the UK government was stepping up preparations to leave the EU without a deal.

The already weaker sentiment deteriorated further after the UK PM Johnson on Monday reiterated his stance that the withdrawal agreement negotiated between the EU and former PM Theresa May is dead unless the Irish border backstop is abolished. 

Adding to this, Johnson’s spokeswoman was further quoted saying that the PM wouldn't even meet EU leaders if they are not willing to change their positions, which did little to ease market fears that the UK will eventually crash out of the EU on October 31.

The pair plunged to its lowest level since March 2017 but managed to find some support ahead of the 1.2100 round figure mark, with extremely oversold conditions prompting some short-covering move after the latest leg of a steep decline over the past 24-hours or so.

The pair bounced back to the 1.2165-70 region, albeit lacked any strong follow-through amid the prevalent bullish sentiment surrounding the US Dollar, which stood stall near two-month tops as market participants keenly await the outcome of the highly anticipated FOMC meeting.

There aren't any major market-moving economic releases due from the UK and hence, the incoming Brexit-related headlines might continue to act as an exclusive driver of the broader market sentiment surrounding the Sterling. 

Later during the early North-American session, the US economic docket - featuring the release of core PCE price index and the Conference Board's Consumer Confidence Index, might provide some impetus and assist traders to grab short-term opportunities.

Technical levels to watch