- The GBP / USD pair attracted some buying on the dips on Friday and recovered a significant portion of the intraday losses.
- The US dollar trimmed early gains and was seen as a key factor lending some support to the main one.
- A sudden spike in US bond yields continued to prop up the USD and limited the upside.
The pair GBP/USD managed to recoup a significant portion of its intraday losses to multi-day lows and has now moved above 1.3800 again.
Following a dovish reaction to a better-than-expected UK GDP report, the pair attracted some falling buying near the 1.3775 region and halted this week’s corrective decline from 34-month highs. The British pound remained well supported by growing optimism that the UK’s leadership in terms of the coronavirus vaccination campaign could facilitate an earlier easing of lockdown restrictions.
On the other hand, the US dollar cut a portion of its intraday gains amid a modest rally in US equity futures. This was seen as another factor that contributed to the intraday bounce of around 35 pips. That said, a sudden spike in US Treasury yields continued to prop up the dollar and kept any further gains for the GBP / USD at bay, at least for now.
The US bond market continued to react strongly to the prospects for approval of the $ 1.9 trillion COVID-19 stimulus package proposed by US President Joe Biden. This makes it prudent to wait for some solid follow-up buying before traders start positioning again for an extension of the recent strong positive movement in the GBP / USD pair observed over the past two weeks.
Market participants are now looking forward to Friday’s only US data, the Michigan Consumer Sentiment Index for February. The data, along with US bond yields and broader market risk sentiment, will play a key role in influencing USD price dynamics. This should help traders seize some short-term opportunities on the last day of the week.
Technical levels
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