- GBP / USD witnesses some selling on Thursday and returns a portion of the previous day’s gains.
- A softer risk tone benefits the safe-haven USD and puts some pressure on the pair.
- Investors are waiting for US economic releases for a significant boost.
The pair GBP / USD remains on the defensive During the European session on Thursday, it remained close to its daily lows around the 1.3810-15 region.
The pair failed to capitalize on the previous day’s rebound following stronger-than-expected UK CPI, from levels below 1.3800 on weekly lows and has moved lower during the first half of trading action on Thursday. A softer risk tone, as evidenced by a cautious sentiment around the stock markets, has offered some support to the safe haven US dollar. This, in turn, has been seen as a key factor that has put some pressure on the GBP / USD pair.
The USD has also been supported by the expectations that the Fed could still begin to reverse its huge pandemic-era stimulus later this year. That said, signs of easing inflationary pressures in the United States increased uncertainty about the likely timing of the Fed’s downsizing plan. This could prevent USD bulls from opening aggressive positions and could help limit any deeper losses to the GBP / USD pair, at least for the moment.
There is no major economic data from the UK, leaving the GBP / USD at the mercy of USD price dynamics. At the start of the American session, investors will take cues from US macroeconomic releases, such as retail sales, the Philadelphia Fed manufacturing index, and initial weekly jobless claims. This, coupled with US bond yields and broader market risk sentiment, could sway the USD.
Looking at the technical picture, the GBP / USD pair managed to defend on Wednesday and attract some buying near the lower limit of a short-term uptrend channel. The mentioned support, currently around the 1.3800 level, should act as a key turning point and help determine the short-term trajectory of the pair.
GBP / USD technical levels
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