- GBP / USD witnessed some intraday selling on Friday and fell to new weekly lows.
- Nervousness over COVID-19 acts like a headwind for the British pound and puts downward pressure on the pair.
- The bulls show some resilience below the 1.3800 level amid subdued demand for the USD.
- The rally in US bond yields could prop up the USD and limit gains ahead of US data.
The pair GBP / USD has fallen below the 1.3800 level, at new weekly lows, at the start of the European session on Friday, although it has quickly recovered and has risen above the 1.3850 level again.
The pair has witnessed some intraday selling on the last trading day of the week and has extended this week’s retracement drop from above the 1.3900 level. The optimistic comments of the previous day from Bank of England Policy Officer Michael Saunders were overshadowed by the concerns about a new COVID-19 outbreak in the UK. This, in turn, has acted as a headwind for the British pound and put pressure on the GBP / USD pair.
On the other hand, a strong rebound in US Treasury yields it has offered some support to the US dollar. Apart from this, expectations that the Fed will tighten its monetary policy earlier than expected they have further underpinned the USD. This has been seen as another factor that has contributed to the intraday decline. The GBP / USD pair, however, has shown some resilience below the 1.3800 level and has quickly rallied around 50 pips in the last hour.
In the absence of big economic releases from the UK, any post-up move could still be seen as a selling opportunity and risks ending rather quickly. The US economic calendar highlights the release of monthly retail sales figures. This, coupled with US bond yields and broader market risk sentiment, could influence USD price dynamics and provide further momentum to the GBP / USD pair.