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GBP / USD bounces away from month-long lows and stabilizes around 1.4100

  • Brexit / COVID-19 jitters dragged GBP / USD to month-long lows on Monday.
  • A dovish USD demand extended some support and helped limit losses.
  • Investors seemed reluctant to place new bets ahead of the FOMC meeting.

The pair GBP/USD it managed to bounce around 30-35 pips from the month-long lows and now appears to have stabilized near 1.4100.

The pair witnessed some selling during the first half of trading action on Monday and fell to the lowest level since mid-May, although it managed to find some support near the 1.4070 region. The British pound was being weighed down by Brexit nervousness and concerns that the UK could delay its plans to completely end restrictions in light of the spread of the Delta variant.

In fact, senior ministers in the UK signed a decision to postpone the lifting of all COVID-19 restrictions beyond June 21. UK Prime Minister Boris Johnson will make a statement on the coronavirus situation later this Monday. This, in turn, was seen as a key factor that acted as a headwind for the British pound.

On the other hand, expectations that the Fed could initiate the discussion on reducing its asset purchases in the face of growing inflationary pressures extended some support to the US dollar. That said, a softer tone around US Treasury yields prevented USD bulls from making aggressive bets and helped limit deeper losses for the GBP / USD pair, at least for now. .

Furthermore, investors also seemed reluctant to place aggressive bets ahead of the next FOMC meeting on June 15-16. There is no major market-moving economic data released on Monday, either from the UK or the US Also, this makes it prudent to wait for a solid follow-up to sales before traders begin to position themselves for any further depreciation movements.

Technical levels

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