- GBP / USD failed again before 1.4200 and was met with new offers on Friday.
- The nervousness of COVID-19, Brexit problems continued to weigh on the British pound and put some pressure on it.
- Resurgent USD demand was seen as another factor contributing to the intraday selling bias.
The pair GBP/USD it extended its steady intraday decline during the early days of the American session and fell to new daily lows, around the 1.4110-15 region in the last hour.
The pair struggled to capitalize on the previous day’s solid bounce of more than 100 pips from the 1.4075-70 region, or four-week lows, and once again failed to break above 1.4200 earlier. Investors remain concerned that the UK could delay its plans to completely end the restrictions on June 21 in light of the spread of the so-called Delta variant. Apart from this, the EU-UK collision over the Northern Ireland protocol acted as a headwind for the British pound and triggered further selling around the GBP / USD pair.
On the other hand, the US dollar returned strongly after the subsequent slide in US CPI figures on Thursday and soared to highs of more than a week. This, in turn, was seen as another factor that put additional downward pressure on the GBP / USD pair. USD bulls did not appear to be affected by the ongoing decline in U.S. Treasury yields, fueled by growing market conviction that the Fed will maintain its ultra-flexible policy stance for a while. longer period despite signs of increasing inflationary pressure.
From a technical perspective, the emergence of some new selling near the 1.4185-90 bid zone favors bearish traders and supports the prospects for further short-term losses. That said, it will still be prudent to wait for some subsequent selling below 1.4100 before positioning yourself for an extension of the depreciation move. This will further suggest that the GBP / USD has peaked in the near term and will pave the way for a slide that tests the key psychological level 1.4000.
However, the key focus will remain the next FOMC policy meeting on June 15-16. This will play a key role in influencing short-term USD price dynamics and will help investors determine the next leg of a directional move for GBP / USD.