- A dovish USD price action offers some support for GBP / USD on Friday.
- The prevailing sentiment of risk aversion could help limit the retracement of the safe-haven USD.
- Fears of new restrictions due to COVID-19 in the UK should limit strong gains.
The pair GBP/USD It has quickly recovered around 60 pips from just below the 1.2900 level and has risen to fresh daily highs during the European session on Friday. At the time of writing, the pair remains in the zone of highs, around 1.2950, although it lacks a solid continuation.
The pair struggled to capitalize on the previous day’s late bounce of around 45 pips, from nearly two-week lows, and was seen swinging in a range during the first half of Friday’s trading action. US dollar bulls held back from opening new positions amid uncertainty about the outcome of the US presidential election. A moderate demand for the USD has been considered a key factor that provided some support to the GBP / USD pair..
However, concerns about the economic consequences of the continued increase in new coronavirus cases they have continued to weigh on investor sentiment. This has been evident from a sharp drop in US equity markets, which extended some support to the safe-haven USD. The dollar was supported by strong third quarter GDP growth data from the United States on Thursday. This, in turn, has limited the rise of the GBP / USD pair.
Investors also seem reluctant and rather prefer to remain on the sidelines amid lingering Brexit-related uncertainties. Furthermore, fears that the UK can impose stricter lockdown measures domestically To curb the rapid rise in the new COVID-19 case they could do even more to limit any further gains for the GBP / USD pair.
There are no major economic data releases from the UK. Meanwhile, the US economic calendar features the second-tier releases of the core PCE price index, Chicago PMI, and revised University of Michigan consumer sentiment. The data, along with broader market risk sentiment, will influence USD price dynamics and could lead to some trading opportunities.
Credits: Forex Street
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