GBP/USD clings to modest intraday gains around 1.2250, lacks continuation

• GBP/USD regains positive traction on Monday and recovers some of the modest losses on Friday.
• Rising US bond yields act as a tailwind for the USD and limit any significant rise in the pair.
• Investors now await the BoE Governor’s scheduled speech in search of near-term opportunities.

The pair GBP/USD extends Friday’s late intraday bounce, from levels below 1.2200, and gains some positive traction on the first day of a new week. The pair maintains its buying tone during the early stages of the European session and is currently trading around the 1.2250 areaup 0.15% on the day.

The recovery in US Treasury yields is expected to provide some support for the US dollar (USD) and will prove to be a key factor acting as a headwind for GBP/USD. Having said that, The signal from the Federal Reserve that it may soon pause the rate hike cycle in the wake of recent turmoil in the banking sector should limit any significant rise in US bond yields. Aside from this, a generally positive risk tone, as evidenced by a further rise in US stock index futures, weighs on the safe-haven USD and continues to offer support to the buying tone surrounding the GBP. /USD.

The news that First Citizens Bank & Trust Company will purchase all Silicon Valley Bank deposits and loans to the Federal Deposit Insurance Corporation (FDIC) calmed market nerves about contagion risk and boosted investor confidence. However, traders remain concerned about the possibility of a full-blown banking crisis. In fact, the head of the International Monetary Fund (IMF), Kristalina Georgieva warned over the weekend that risks to financial stability have increased. This, along with Russia’s decision to move nuclear weapons near Belarus, continues to keep any optimism in the markets at bay.

In the absence of relevant economic data, both from the UK and the US, the mixed fundamental background The aforementioned justifies some caution on the part of aggressive traders and before opening new directional positions around the GBP/USD pair. Having said that, Bank of England (BoE) Governor Andrew Bailey’s speech, could influence the pound sterling and give the pair a significant boost. In the meantime, attention will remain focused on the release of the US core PCE price index, the Fed’s preferred indicator of inflation, due on Friday.

GBP/USD technical levels