- GBP / USD witnessed some selling for the second consecutive session on Monday.
- Brexit-related uncertainties turned out to be a key factor weighing on the GBP.
- Falling US bond yields and risk appetite undermined the USD and helped limit losses.
The pair GBP/USD it maintained its offered tone during the mid-European session and was last seen hovering near the lower end of the daily trading range, around the 1.4130-25 region.
The pair extended the previous session’s retracement slide from the 1.4235 region, or three-year highs, and witnessed some selling for the second consecutive session on Monday. In the absence of new fundamental developments, fears about the long-term impact of Brexit and the economic damage from the pandemic acted as a headwind for the British pound. That said, a combination of factors helped limit deeper losses for the GBP / USD pair.
Investors remain optimistic about the UK’s economic outlook amid the impressive pace of coronavirus vaccination and easing of lockdown measures. According to official data, more than 70% of adults have received their first dose while some 22 million have received their second dose. This, coupled with the effectiveness of COVID-19 vaccines against the Indian variant, bodes well for the UK government’s plan to end the restrictions entirely on June 21.
On the other hand, the continued decline in US Treasury yields kept dollar bulls on the defensive. Apart from this, the underlying bullish sentiment in the equity markets also acted as a headwind for the safe haven dollar. Even expectations that the Fed was going to start cutting its bond buying program sooner rather than later did not give the USD a break either. This was seen as another player that helped limit the losses of the GBP / USD pair.
There is no major market-moving economic data released on Monday, either from the UK or the US So the key focus will be on a speech scheduled by Bank of England Governor Andrew Bailey, who along with other members of the Monetary Policy Committee will testify before the Treasury Select Committee later during the North American session. The incoming headline will influence the price dynamics of the British pound and produce some trading opportunities around the GBP / USD pair.
Technical levels
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