- GBP / USD captures some lower buying on Monday amid subdued USD price action.
- The appetite for risk and the decline in US bond yields weighs on the demand for the safe-haven USD.
- Expectations of an early rate hike from the Fed help limit the USD’s slide and limit the pair’s gains.
The pair GBP / USD has moved higher and has reached new daily highs around the 1.3710 level in the middle of the European session on Monday. At the time of writing the pair remains positive around the round 1.3700 level.
The pair has captured some lower level buying on the first day of a new trading week and has rallied about 50 pips from daily lows, near the region 1.3660-55. The rally has allowed the GBP / USD pair to recoup some of Friday’s losses and is due to a subdued action in the price of the US dollar.
The risk appetite predominantAs shown by the extension of the bullish movement in the stock markets, it has been seen as a key factor that has weighed on the demand for the safe haven dollar. Apart from this, a modest decline in Treasury yields The US has also acted as a headwind for the USD.
That said, concerns about Potential Risks of the Evergrande Group Debt Crisis in China and prospects for an early rate hike by the Fed they have helped limit losses around the dollar. It’s worth remembering that the Fed’s so-called dot chart indicated the inclination of policymakers to raise interest rates in 2022.
This, in turn, has capped any significant gains for the GBP / USD pair, justifying the bulls’ caution. In the absence of significant UK economic data, it will be wise to wait for some follow-up purchases before positioning yourself for additional profit.
Market participants are now awaiting the US economic calendar, which highlights the release of data from durable goods orders. This, coupled with scheduled speeches from a number of influential FOMC members, will influence USD price dynamics and could generate some trading momentum for the GBP / USD pair.
Later during the American session, traders will take more cues from the Bank of England Governor’s speech Andrew Bailey for some significant trading opportunities around the GBP / USD pair.
GBP / USD technical levels
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