GBP / USD declines further from multi-year highs, dips towards 1.3600

• GBP / USD failed to sustain intraday gains to new multi-year highs around 1.3700.
• Concerns about an increase in COVID-19 cases across the UK were seen to weigh on the British pound.
• The prevailing bearish sentiment around the USD should help limit the pair’s slide.

The pair GBP/USD it fell around 90 pips from multi-year highs and fell to fresh daily lows, around the 1.3615 region during the middle of the European session.

The pair struggled to capitalize on its positive intraday move, instead faced rejection near the 1.3700 mark amid concerns over the UK’s service sector exclusion from the Brexit deal. This comes amid an unprecedented level of COVID-19 infection in the UK, which, in turn, was seen as a key factor weighing on the British pound.

British Prime Minister Boris Johnson warned Sunday that stricter restrictions are likely to be imposed to curb the continued rise in new cases. Furthermore, UK Health Secretary Matt Hancock said he was incredibly concerned about the South African variant of the coronavirus, which overshadowed optimism about the vaccine launch.

Meanwhile, the decline is likely to remain muffled, at least for the time being, following the prevailing bearish sentiment around the US dollar. The likelihood of increased US fiscal stimulus, coupled with speculation that the Fed will keep rates lower for a longer period, continued to undermine the dollar on the first day of 2021.

Therefore, the key focus will remain this week’s release of the latest minutes from the FOMC’s monetary policy meeting on Wednesday. Meanwhile, the events surrounding the coronavirus saga will continue to play a dominant role in influencing the GBP / USD pair. Traders could also follow signs from Monday’s release of the final US manufacturing PMI.

Technical levels