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GBP / USD clings to daily gains just below 1.3950

  • GBP / USD gains some positive traction on Thursday amid the prevailing selling bias around the USD.
  • Lowering expectations of a Fed rate hike and a further downward movement in US bond yields weigh on the USD.
  • The nervousness around COVID-19 helps limit losses for the safe-haven USD and limits the pair’s gains.

The pair GBP/USD moves with a slight positive bias during the European session on Thursday, staying close to the upper end of its intraday trading range just below the 1.3950 level.

The pair has built on the good bounce the day before from the 1.3885 region and gained some traction during the first half of Thursday’s trading action. The rally is solely due to the prevailing bearish tone around the US dollar, although it has lacked a strong follow-on buy.

The US dollar has remained weak near multi-week lows amid expectations that the Fed will keep interest rates low for a longer period. Aside from this, the current drop in US Treasury yields has also acted as a headwind for the dollar. Having said that, a softer risk tone has helped limit the dollar’s decline as a safe haven.

Investors have grown wary amid the revamped fears about another dangerous wave of coronavirus infections in some countries. This appears to be the only factor that has prevented the bulls from opening aggressive positions and could limit gains for the GBP / USD pair, at least for the moment, amid the absence of relevant economic releases from the UK.

Meanwhile, the US economic calendar includes the publication of weekly initial jobless claims. This, along with US bond yields and broader market risk sentiment, will influence USD price dynamics. Apart from this, some cross volatility derived from post-ECB movements in EUR / GBP could generate short-term trading opportunities.

GBP / USD technical levels

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