- GBP / USD witnessed some selling on Tuesday and broke two consecutive days of the winning streak.
- The nervousness of COVID-19, Brexit problems weighed on the British pound and put some pressure on the pair.
- A modest USD strength also contributed to the intraday selling bias amid the prevailing cautious climate.
The pair GBP/USD It maintained its offered tone during the early days of the American session and was last seen trading just below 1.4150, a few pips above the daily lows.
The pair struggled to capitalize on its gains recorded in the last two trading sessions and once again started to pull back from around 1.4200. The slide forced the GBP / USD pair to reverse the positive movement of the previous day and was sponsored by a combination of factors.
Doubts that the spread of the so-called Delta variant could disrupt the UK government’s reopening plans on June 21 acted as a headwind for the British pound. This comes amid signs that Britain’s relationship with the European Union has deteriorated, leading to further selling around the GBP / USD pair.
In a further escalation of a dispute over the Northern Ireland protocol, the EU is considering tougher retaliatory measures if the UK government fails to meet its post-Brexit obligations. In addition to this, a modest strength of the US dollar was seen as another factor weighing on the GBP / USD pair.
Softer US NFP figures on Friday dampened market expectations of an earlier-than-anticipated takeoff, which was evident by the ongoing decline in US Treasury yields. That said. Concern that mounting inflationary pressure could force the Fed to begin discussions on reducing its asset purchases extended some support to the dollar.
Therefore, the key focus will remain on Thursday’s release of the US IPC report, which will be another important macro data that will set the tone for the next FOMC meeting on June 15-16. Investors could refrain from aggressive bets pending key data. This could help limit the decline in the GBP / USD pair.
Technical levels
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