GBP / USD remains under pressure around 1.3750

• A combination of factors puts some pressure on GBP / USD for the second day in a row.
• A subdued USD price action offers some support and limits the pair’s losses, at least for now.

The pair GBP/USD remains aimless at the start of the European session on Monday, moving within a narrow range around the 1.3750 level.

The pair has struggled to capitalize on Friday’s modest bounce from the 1.3720 region and has encountered fresh selling on the first day of a new trading week due to a combination of factors.

The impasse between the EU and the UK on the Northern Ireland ProtocolAlong with nervousness over COVID-19, it has continued to act as a headwind for the British pound. It is worth remembering that the EU rejected the UK’s demand to rewrite an agreement overseeing troubled post-Brexit trade involving Northern Ireland.

What’s more, the COVID-19 situation in Britain has worsened in recent weeks amid the spread of the highly contagious Delta variant of the coronavirus. This, to a greater extent, has overshadowed the UK government’s decision last week to lift restrictions on the coronavirus in the UK.

Meanwhile, Concerns about the economic fallout of the coronavirus have weighed on investor sentiment. This has been evidenced by a generally weaker tone around equity markets, which has benefited the US dollar as a safe haven against its British counterpart.

Having said that, a pullback in US Treasury yields has prevented the USD from strengthening. In the absence of any major major economic releases, be it from the UK or the US, this could help limit any deeper losses for the GBP / USD pair, at least for now.

Investors could also refrain from opening aggressive positions, preferring to wait on the sidelines before this week’s key event: the FOMC monetary policy meeting. The result will influence the USD in the short term and provide a new directional momentum to the GBP / USD pair.

GBP / USD technical levels