GBP / USD struggles to capitalize on intraday bounce, remains below 1.3900

  • A modest USD pullback helped GBP / USD attract some buying at 1.3850 on Monday.
  • Chances of an early Fed downsizing, COVID-19 jitters propped up the USD and limited gains.

The pair GBP/USD it struggled to capitalize on its good intraday bounce from 1.3850, or a week and a half lows, and quickly fell back a few pips from the daily highs. The pair was last seen trading around the 1.3875-80 area, trading almost unchanged for the day.

As investors looked beyond Friday’s hit NFP report, the US dollar witnessed some profit-taking on the first day of a new trading week amid a modest pullback in US Treasury yields. This, in turn, was seen as a key factor that extended some support to the GBP / USD pair. That said, a combination of factors acted as a tailwind for the USD and kept any significant gains for the pair in check.

Investors now appear to have begun to weigh the possibility that the Fed may begin to reduce its asset purchases later this year and raise interest rates as early as 2022. Aside from this, concerns about the economic consequences of The fast-spreading Delta variant of covid-19 propped up the safe-haven dollar. This overshadowed the downtrend of new infections in the UK and prevented the GBP bulls from making any new bets.

The GBP / USD pair, so far, has remained capped below 1.3900 and remains at the mercy of USD price dynamics amid the absence of relevant economic releases moving in the market. Market participants are now looking forward to scheduled speeches from Atlanta Fed Chairman Raphael Bostic and Richmond Fed Chairman Thomas Barkin. This, coupled with US bond yields and broader risk sentiment, could sway the USD and give GBP / USD some momentum.

Technical levels

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