- Signs of a prolonged lockdown in the UK trigger some selling around GBP / USD.
- Disappointing UK Retail Sales and PMI releases weigh further on GBP.
- A pullback in the stock markets benefits the safe-haven USD and adds to the pair’s selling bias.
The pair GBP/USD stays under pressure and falls to a new daily low, just below the 1.3650 level, before the start of the American session on Friday. At the time of writing, the pair remains in the zone of lows around 1.3640.
The pair has witnessed a strong sell on the last trading day of the week, breaking three consecutive days of earnings and returning the positive movement of the previous day to new highs of 32 months. The pound sterling has been affected by the possibility of a prolonged lockdown due to coronavirus in Britain. In fact, British Prime Minister Boris Johnson said it was “too early” to say whether restrictions due to Covid will be lifted in spring.
The intraday selling bias around the British pound has accelerated in reaction to weak UK retail sales figures for December. The downward pressure has continued unabated following the preliminary release of the UK PMI, worse than expected. This has added to concerns about UK economic growth in early 2021 and has negatively affected the GBP.
Apart from this, a change in global risk sentiment has benefited the safe haven US dollar. This has been seen as another factor that has further contributed to the GBP / USD intraday decline. That said, a pullback in US Treasury yields has prevented dollar bulls from opening aggressive positions and could help limit any further decline in the pair.
This makes it prudent to wait for a strong continuation sell before confirming that the GBP / USD has peaked in the short term and has positioned itself for any significant corrective declines. However, the pair still appears poised to end the week with gains as market participants await the release of the US PMI for further momentum.
GBP / USD technical levels
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