GBP / USD cuts intraday gains, dips back below 1.3900

• GBP / USD struggled to capitalize on its positive intraday move amid a good USD rebound.
• A sharp turn in equity markets boosted some safe-haven flows to the dollar.
• The decline appears limited, which warrants some caution before placing aggressive bearish bets.

The pair GBP/USD it fell almost 50 pips from the daily lows and has fallen below 1.3900, back towards the lower end of its daily trading range during the early days of the American session.

A turnaround in global equity markets boosted some safe-haven flows and helped the US dollar reverse its initial lost ground towards one-month lows. This, in turn, was seen as a key factor that did not help the GBP / USD to capitalize on its positive intraday movement, but instead triggered some selling in the 1.3935-40 region.

That said, a further downward leg in US Treasury yields, amid expectations that the Fed will maintain its ultra-flexible policy stance for a longer period, could limit the gains of the US. dollar. Apart from this, a combination of factors acted as a tailwind for the British pound and could help limit any significant declines for the GBP / USD pair.

Investors remained bullish on the downward trend of new COVID-19 cases in the UK. This, coupled with a stronger UK economic recovery, has fueled speculation that the Bank of England (BoE) could be among the first major central banks to reduce their support for the stimulus. This, in turn, should continue to prop up the British pound.

However, the GBP / USD pair, so far, has managed to hold on with modest intraday gains. In the absence of major economic releases to move the market, any subsequent decline could be seen as a buying opportunity. This should act as a key point for intraday traders amid the absence of relevant economic releases to move the market.

Technical levels