- GBP / USD struggled to capitalize on its positive intraday move above 1.3700.
- Rising U.S. bond yields helped reignite demand for USD and limited the pair’s gains
- The decline appears muffled as the focus remains on the next meeting of the Bank of England.
The pair GBP/USD It fell around 40 pips from the daily highs and was last seen trading modest gains around the 1.3670-75 region.
Following the previous day’s pullback from near multi-year highs around the 1.3755-60 supply zone, the pair regained positive traction on Tuesday and rose again above 1.3700. The bullish mood prevailing in the market undermined the safe haven US dollar and pushed GBP / USD higher during the first half of the trading action.
Global risk sentiment got a strong boost after Democrats introduced a $ 1.9 trillion budget measure Monday night in a step toward bypassing Republicans and the eventual approval of President Joe’s COVID-19 relief package. Biden. This move came even when a group of Republican senators visited the White House to discuss a scaled-down $ 618 billion alternative plan.
Meanwhile, expectations of increased government borrowing coupled with risk flows triggered a new boost in US Treasury yields. Apart from this, the emergence of some selling around the shared currency helped reignite demand for the USD, which in turn limited any further gains for the GBP / USD pair, instead prompting some selling at higher levels.
That being said, the decline is likely to remain muffled amid the interest rate decline from any 2021 Bank of England interest rate cut. Therefore, investors could refrain from aggressive bets and would rather wait on the sidelines ahead of the Bank of England policy meeting on Thursday. Meanwhile, USD price dynamics could generate some short-term trading opportunities.
Technical levels
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