- GBP / USD is witnessing some profit taking and is moving lower during the European session.
- The fundamental support factor should help limit any significant drop in the pair.
- The weakness below the 1.3800 level could still be seen as an opportunity for the bulls.
The pair GBP/USD has dropped more than 40 pips at the start of the European session on Thursday and has recorded new daily lows around the 1.3815 region. At the time of writing, the pair is virtually unchanged on the day around the 1.3825 region.
The pair has struggled to maintain its modest intraday gains and has started to retreat from near nearly three-year highs, around the 1.3860-65 region touched the previous day. The pullback could only be attributed to some profit-taking and is likely to remain limited amid the absence of a relevant fundamental catalyst.
The British pound could continue to benefit from the leadership of the United Kingdom in terms of the vaccination campaign against the coronavirus, which could facilitate an earlier reduction of lockdown restrictions. Besides this, decreasing the odds of any interest rate cut from the Bank of England it could further prop up the British pound and offer some support to the GBP / USD pair.
On the other hand, the US dollar remains weak near two-week lows amid the prevailing sentiment of risk appetite and also pressured by a drop in US Treasury yields. This, along with Wednesday’s weaker US consumer inflation figures and pessimistic comments from Fed Chairman Jerome Powell, they could keep the dollar bulls on the defensive.
This, in turn, warrants some caution for bears and before positioning for a significant corrective decline around the GBP / USD pair. Therefore, any further decline below the round 1.3800 level could still be seen as a buying opportunity and find decent support near 1.3760-55.
Market participants are now awaiting the US economic calendar, highlighting the release of initial jobless claims. Other than this, broader market risk sentiment and US bond yields could influence USD price dynamics and generate some short-term trading opportunities around GBP / USD.
GBP / USD technical levels
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