- GBP / USD regained positive traction on Thursday and recovered some of the losses overnight.
- The retraction in US bond yields undermined the dollar and continued to support the intraday rally.
- Brexit-related uncertainties prevented the bulls from making aggressive bets and limited any further gains.
The pair GBP/USD it maintained its modest gains during the early days of the American session, although it lacked subsequent purchases and remained below 1.4150.
The pair halted the previous day’s corrective decline from 1.4200 and regained some positive traction on Thursday amid the emergence of some new selling around the US dollar. Despite indications that the Fed has begun debating QE phasing, the USD struggled to gain significant traction amid a sharp pullback in US Treasury yields.
The USD remained depressed and could not get any respite from the mixed macroeconomic figures in the US Initial weekly jobless claims in the US fell to 444,000 during the week ending May 15, down from 450,000. planned. However, this was overshadowed by the Philadelphia Fed Manufacturing Index, which fell more than expected to 31.5 in May from 50.2 in the previous month.
On the other hand, the pound sterling was supported by the optimistic outlook for the UK economic recovery, reinforced by the gradual relaxation of the lockdown measures. UK Prime Minister Boris Johnson said on Tuesday there is nothing conclusive yet to indicate that the Indian variant would force Britain to deviate from its plan to completely end the restrictions on June 21.
That said, the prevailing climate of caution in equity markets extended some support to the dollar as a safe haven. Aside from this, the uncertainty over the post-Brexit deal in Northern Ireland prevented the bulls from making aggressive bets and kept any further gains for the GBP / USD pair limited. This, in turn, warrants some caution before placing aggressive bullish bets.
Technical levels
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