GBP / USD with modest losses, remains below the 1.3900 level

• A modest pickup in USD demand triggers some selling around GBP / USD on Tuesday.
• Risk appetite and pessimistic expectations from the Fed limit the USD and help limit the pair’s losses.

The pair GBP/USD moves with a slight negative bias during the European session on Tuesday, remaining slightly lower around the region of 1.3880.

The pair has moved lower during the first part of the trading action on Tuesday and has retreated further from the highs of the previous day, around the 1.3930 region. The US dollar has found some support thanks to a modest rally in US Treasury yields. This, in turn, has been seen as a key factor that has put some pressure on the GBP / USD pair.

Having said that, the underlying bullish tone in financial markets has prevented USD bulls from opening aggressive positions. Apart from this, the firm expectations that the Fed will keep interest rates low for a longer period it could further help limit dollar gains and help limit any further losses to the GBP / USD pair.

There is no major economic data release from the UK, while the US economic calendar features the release of the index of Conference Board consumer confidence. This makes it prudent to wait for a solid follow-up to selling around GBP / USD before positioning for any further bearish moves.

Investors may also refrain from opening aggressive positions and prefer to wait on the sidelines. before the latest FOMC monetary policy decision on Wednesday. This will be followed by the release of the preliminary US Q1 GDP report, which will play a key role in influencing the USD and could generate further directional momentum to the GBP / USD pair.

GBP / USD technical levels