GBP / USD approaches 1.4200 as USD struggles to find demand

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  • GBP / USD rises towards 1.4200 during the American session.
  • The US Dollar Index remains on track to close below 90.00.
  • An EU official says patience is wearing thin between the UK in Northern Ireland.

The GBP/USD started the new week with a weak base and fell towards 1.4100 in the first trading hours of the European session. However, the pair reversed its direction with renewed USD weakness and was last seen gaining 0.25% on the day at 1.4190.

DXY seems to end the day in negative territory

Hours earlier, the USD capitalized on the rebound in Treasury yields and the US Dollar Index (DXY) hit a daily high of 90.30 before losing its traction. In the absence of significant fundamental drivers and high-level data releases, the DXY fell below 90.00, suggesting that Friday’s uninspiring non-farm payroll report continues to hurt the currency.

There will be no UK data release on Tuesday. Later in the day, the US Goods Trade Balance and NFIB Business Optimism Index will be considered for further momentum.

Meanwhile, an EU official told Reuters on Monday that the EU’s patience was wearing thin with the UK regarding the Northern Ireland Protocol. “The EU has been patient, but the EU’s patience is wearing thin. If this continues, we will have to consider all the tools, all the options available,” the official said.

Although the USD market valuation is likely to continue to affect GBP / USD movements in the short term, escalating political tensions between the EU and the UK could force the British pound to weaken against its main rivals.

Technical levels

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