- GBP / USD gains strong positive traction for the third day in a row on Tuesday.
- The Fed’s pessimistic expectations and a positive risk tone weigh heavily on the safe-haven USD.
- The upbeat UK jobs report further boosts the GBP and supports the pair’s upward move.
The selling bias around the USD has tightened during the European session on Tuesday and has pushed the GBP / USD pair above the 1.4200 region to the highest level since February 24. At the time of writing, the pair is holding near the daily highs around 1.4220.
A combination of supporting factors has helped the pair gain strong continuation traction for the third day in a row on Tuesday. The US dollar has maintained its bearish tone amid speculation the Fed will keep interest rates low for a longer period. This, along with UK job details, mostly upbeat, has provided an additional boost to the GBP / USD pair.
The disappointing US retail sales report on Friday has reaffirmed the Fed’s pessimistic view and it has forced investors to lower their expectations of an earlier-than-expected bond buying tightening. Beyond this, a positive risk tone has weighed further on the safe-haven US dollar, which, so far, has failed to respite from a modest rally in US Treasury yields.
On the other hand, the pound sterling has remained supported by the optimistic prospects for a UK economic recovery after the pandemic, amid the gradual relaxation of lockdown restrictions. Optimism has been fueled by a better-than-expected UK jobs report, which has shown that the official unemployment rate unexpectedly fell to 4.8% during the three months until March.
Furthermore, the change in Unemployment claims registered a surprise drop of -15,100 people in April and the previous month’s figure has also been revised to show a decrease of -19,400 compared to the +10,100 previously reported. This has been seen as another factor that has acted as a tailwind for the British pound and has continued to support the strong buying tone around GBP / USD.
There is no major economic data release from the US This, in turn, suggests that the path of least resistance for GBP / USD is to the upside. That said, mild overbought conditions on intraday charts could prevent investors from opening aggressive bullish positions, as the focus now shifts to the FOMC minutes on Wednesday.
GBP / USD technical levels
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