- The current USD pullback helped GBP / USD take advantage of the positive move.
- Uncertainty about the Fed’s phasing plan, the risk appetite boost hit the dollar as a safe haven.
- The market focus will continue in Fed Chairman Powell’s speech at the Jackson Hole Symposium.
The pair GBP/USD It reversed an intraday decline to levels below 1.3700 and was last seen trading modest intraday gains around the 1.3720-25 zone.
The pair built on the previous day’s strong recovery move from near the 1.3600 level, or month-long lows, and gained some traction during the early part of Tuesday’s trading action. The momentum was solely sponsored by the current decline in the US dollar, although it lacked follow-up and faltered near 1.3750.
Investors now appear to have lowered their expectations about the likely time when the Fed will begin to reduce its pandemic-era stimulus amid the worsening COVID-19 situation in the U.S. In fact, the United States posted the highest ever. number of new cases since Monday in January. This, coupled with the boost in risk appetite, undermined the safe-haven dollar.
Global risk sentiment rose after China said it had stopped the community spread of COVID-19. This could have restored some confidence in China’s growth dynamics for the rest of the year. Aside from this, the full approval of the Pfizer / BioNTech COVID-19 vaccine further boosted investor appetite for perceived riskier assets.
That said, a modest rally in US Treasury yields helped limit deeper losses for the dollar. Investors also seemed reluctant to make aggressive bets ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium. This, in turn, appeared to be the only factor that kept any further gains for GBP / USD limited.
Market participants are now looking forward to the US economic agenda, which features second-tier data from New Home Sales and the Richmond Manufacturing Index. The data is unlikely to provide a significant boost, although broader market risk sentiment could influence USD price dynamics and generate some trading opportunities around the GBP / USD pair.
Technical levels
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