- The renewed selling bias around the USD helps GBP / USD regain positive traction on Tuesday.
- The optimistic sentiment prevailing in the market weighs on the safe-haven USD.
- The rise appears limited as the focus remains on the Bank of England’s monetary policy meeting on Thursday.
The pair GBP/USD has risen to new daily highs at the start of the European session on Tuesday, with the bulls making a new attempt to seize momentum above the round level 1.3700.
The pair has halted the previous day’s retracement decline, from the 1.3755-60 resistance zone at multi-year highs, and has attracted some buying just above the 1.3650 region on Tuesday. Market optimism has sparked further selling around the safe-haven US dollar, which in turn has been seen as a key factor driving GBP / USD higher.
Investors have turned optimistic about a strong global economic recovery, amid firm expectations of massive fiscal stimulus measures in the United States, especially after Democratic lawmakers introduced the $ 1.9 trillion budget measure on Monday. This move has been seen as a step toward eluding the Republicans and winning their approval in the United States Congress.
Apart of this, the diminishing odds of any Bank of England rate cut in 2021 has benefited the British pound and it has provided an additional boost to the GBP / USD pair. Indeed, UK money markets indicate that investors have delayed expectations of a 10 basis point interest rate cut by the Bank of England until 2022, compared to earlier expectations of a move in December.
Therefore, the key focus of investors will continue to be the next BoE monetary policy meeting on Thursday. Meanwhile, the GBP / USD pair is likely to remain within the two-week range amid the absence of any major economic data releases. That said, events surrounding the coronavirus saga could instill some volatility and generate some short-term business opportunities.
GBP / USD technical levels
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