- GBP / USD gains strong positive traction for the sixth day in a row on Monday.
- Diminishing expectations of a Fed rate hike continue to weigh on the USD and support the pair’s upward movement.
- A sustained move above the monthly highs will lay the foundation for additional gains.
The emergence of some new selling around the USD during the European session on Monday has pushed the GBP / USD pair to nearly two-week highs, around the 1.3885-90 region.
Following a modest opening gap to the downside on the first day of a new trading week, the pair has captured some buying and has turned positive for the sixth day in a row. The strong bullish movement has allowed the GBP / USD pair to build on last week’s solid bounce from the support of the 100-day SMA, near the 1.3670 area, and is solely due to the prevailing bearish sentiment around the US dollar.
Despite strong economic data from the United States, investors appear to be convinced that the Fed will keep interest rates near zero for a longer period. This has been evident by the recent drop in the yield on the benchmark 10-year US government bond, which plunged to 1.5280% last week. This, in turn, has continued to weigh on the dollar and has been seen as a key factor propelling the GBP / USD pair higher.
Meanwhile, the renewed Fears about another dangerous wave of coronavirus infections around the world have reduced investor appetite for perceived riskier assets. However, a slight deterioration in global risk sentiment has done little to support the USD as a safe haven or hinder the current positive momentum of GBP / USD towards the 1.3900 level, or the highest level since April 6. .
Now it will be interesting see if the GBP / USD pair is able to capitalize on the move or stops near the resistance of the monthly highs near the 1.3915-20 resistance zone. In the absence of major economic releases from either the UK or the US, USD price dynamics will continue to play a key role in influencing the pair and could allow investors to seize some short-term opportunities.
GBP / USD technical levels
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