- GBP / USD struggles to find firm direction on Monday and remains trapped within a range.
- The overall strength of the USD is a key factor limiting the pair’s rise.
The pair GBP/USD is extending its side consolidation price action during the European session on Monday and remains trapped within a range below the 1.3850 region.
The pair showed some resistance below the 1.3800 level on Fridayalthough, so far, it has struggled to post a significant recovery from the lows of nearly a month. A generalized strength of the US dollar has been considered a key factor that has prevented the bulls from opening new positions. and has limited the rise of the GBP / USD pair.
The dazzling US jobs report by February on Friday reinforced the narrative of a strong economic recovery in the United States after the pandemic and has continued to provide some support to the USD. Apart from this, a new boost in US Treasury yields has provided an additional boost to the USD.
The Senate of The United States approved the highly anticipated $ 1.9 trillion stimulus package on Saturday and triggered another sell-off in the US bond market. This, coupled with expectations of a pick-up in US inflation, has brought 10-year US bond yields back closer to 1.60%, close to a one-year high.
Meanwhile, the bond market crash has raised fears in other asset classes. Furthermore, news of attacks on Saudi Arabian oil facilities has led to a cautious mood on the stock markets. This, in turn, has offered some additional support to the safe-haven US dollar.
On the other hand, sterling has found some support in easing the coronavirus lockdown measures in the UK. As a first step in a four-phase plan, all schools reopened as of March 8 and two people will be allowed to meet in public spaces outdoors.
Meanwhile, the GBP / USD pair has had a fairly quiet reaction to comments from Bank of England Governor Andrew Bailey. At a webinar this Monday, Bailey has said the economic outlook is positive and that we will see an increase in inflation in the short term.
There is no major economic data release on Monday, either from the UK or the US, leaving GBP / USD at the mercy of USD price dynamics. That said, US bond yields and overall market risk sentiment will influence the USD and could lead to some short-term trading opportunities.
GBP / USD technical levels
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