- GBP / USD halts its intraday decline and quickly recovers from the 1.3600 area.
- A turnaround in risk sentiment weighs on the safe-haven USD and helps the pair rally.
- Obstacles to the US stimulus plan could limit gains ahead of the FOMC’s decision on Wednesday.
The pair GBP / USD has recovered around 90 pips from week-long lows, reached at the start of the European session around the 1.3610 region, and has moved to new daily highs right at the 1.3700 level. At the time of writing, the pair is up 0.15% on the day at 1.3690.
The pair has extended its recent pullback from multi-year highs and witnessed some sales during the first half of the European session on Tuesday. The intraday decline has not appeared to be affected by UK employment details, mostly optimistic, although it has managed to find decent support just above the 1.3600 level.
A trend reversal in global risk sentiment, as shown a positive rally in European equity markets has not helped the safe-haven US dollar capitalize on its modest intraday gains. This, in turn, has been seen as one of the key factors that have attracted some lower level buying around GBP / USD.
Having said that, The hike is likely to remain limited amid doubts about the size and timing of the US fiscal stimulus. Republicans raised objections against the size of the package, while Democratic Majority Leader Chuck Schumer said a comprehensive agreement could take four to six weeks.
It is worth remembering that the President of the United States, Joe Biden, had proposed a stimulus package for COVID-19 of 1.9 trillion dollars to support the economic recovery of the United States. Diminishing hopes of a quick approval of a new economic stimulus in the US they could limit any movement in risk appetite and help limit the dollar’s slide.
Market participants are now awaiting the release of the US Conference Board Consumer Confidence Index. This, along with news about US stimulus and developments related to the coronavirus saga, could influence the USD price dynamics and provide some momentum to the GBP / USD pair.
Meanwhile, the key focus remains on the FOMC’s latest monetary policy decision on Wednesday. This will be followed by the release of the preliminary US fourth quarter GDP report on Thursday. This, in turn, will boost the USD and help investors determine the short-term movement of the GBP / USD pair.
GBP / USD technical levels
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