GBP/USD refreshes session tops, around 1.3815-20 region
|- GBP/USD gained some positive traction on Wednesday and moved back above the 1.3800 mark.
- The optimism over the easing of COVID-19 restrictions in the UK underpinned the British pound.
- A subdued USD demand remained support, though the risk-off mood might cap any strong gains.
- Investors now look forward to the FOMC June meeting minutes for a fresh directional impetus.
The GBP/USD pair quickly reversed an early European session dip and climbed back above the 1.3800 mark, back closer to daily tops in the last hour.
The pair attracted some dip-buying near the 1.3775 region on Wednesday and for now, seems to have stalled the previous day's sharp retracement slide from the vicinity of the 1.3900 mark. The UK Prime Minister Boris Johnson set out plans for the final step of lifting lockdown in the UK, which, in turn, was seen as a key factor that extended some support to the British pound. Apart from this, a subdued US dollar price action provided a modest lift to the GBP/USD pair.
The USD struggled to capitalize on the overnight strong gains and remained on the defensive through the first half of the trading action. Expectations that the Fed will wait for a longer period before tapering its asset purchases or raising interest rates held the USD bulls from placing aggressive bets. Apart from this, the ongoing downfall in the US Treasury bond yields was seen as another factor that weighed on the greenback and exerted some support to the GBP/USD pair.
That said, the prevalent risk-off mood – amid concerns about the spread of the highly contagious Delta variant of the coronavirus – extended some support to the safe-haven greenback. This might keep a lid on any meaningful upside for the GBP/USD pair. Investors might also refrain from placing aggressive bets ahead of the release of the FOMC June meeting minutes. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move.
Given that the Fed brought forward its timetable for the first post-pandemic interest rate hike at the end of June policy meeting, investors will look for fresh clues about the central bank's policy outlook. This will play a key role in influencing the USD price dynamics in the near term and assist investors to determine the next leg of a directional move for the GBP/USD pair.
Technical levels to watch
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