- GBP/USD reverses an intraday slide amid fresh selling around the dollar.
- Expectations for less aggressive Fed hikes and lower US bond yields weigh on the dollar.
- COVID-19 jitters in China could offer support for the safe-haven USD and limit the pair’s upside.
The pair GBP/USD attracts some buying near the 1.2025 zone on Monday and rises to a new daily high during the early part of the European session. The pair is currently around the 1.2100 level and remains close to its highest level since August 12 touched last week at 1.2153.
After a modest intraday rise, US dollar is back under selling pressure and is considered a key factor supporting the GBP/USD pair. A dovish assessment of the November FOMC meeting minutes, released last week, cemented the expectations for an interest rate rise of 50 basis points in December. This is evident in a further decline in US Treasury yields and continues to weigh on the dollar.
The pound sterling, for its part, continues to receive support from the expectations that the Bank of England will continue to raise borrowing costs to combat persistent inflation. This provides an additional boost to the GBP/USD pair and continues to offer support for the pair. Having said that, the bleak outlook for the UK economy could act as a headwind for the pound sterling and limit the pair’s riseat least for now.
Apart of this, The prevailing risk-off sentiment, amid concerns about the worsening COVID-19 situation, could offer some support for the dollar as a safe haven and limit the GBP/USD pair. In the absence of any major economic releases in both the UK and US, the fundamental background warrants some caution on the part of aggressive traders before positioning for further appreciation.
Market participants are watching speeches from influential FOMC members: St. Louis Fed President James Bullard and New York Fed President John Williams. This, coupled with US bond yields and broader risk sentiment, will support the US dollar and provide some lift to GBP/USD.
GBP/USD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
