GBP/USD sticks to modest intraday gains above mid-1.2600s amid softer USD
|- GBP/USD attracts buyers for the second straight day amid subdued US Dollar price action.
- BoE Chief Economist Huw Pill's hawkish remarks underpin the GBP and remain supportive.
- Bets that the Fed will keep rates higher for longer to limit the USD losses and cap the pair.
The GBP/USD pair builds on Friday's goodish rebound from the 1.2600 round figure, or a one-and-half-week trough and gains some positive traction for the second successive day on Monday. The momentum lifts spot prices to a multi-day peak, around the 1.2660-1.2665 area during the Asian session and is sponsored by a combination of factors.
The British Pound (GBP) draws support from the Bank of England (BoE) Chief Economist Huw Pill's hawkish remarks on Friday, saying that the first cut in the key interest rate is still some way off. The US Dollar (USD), on the other hand, remains depressed in the wake of Friday's disappointing US macro data and less hawkish remarks by Federal Reserve (Fed) officials. Apart from this, the recent risk-on rally across the global equity markets further undermines the safe-haven Greenback, which, in turn, lends some support to the GBP/USD pair.
The downside for the USD, however, seems limited amid growing acceptance that the Fed will keep interest rates higher for longer. Traders might also refrain from placing aggressive directional bets ahead of this week's important US economic releases, including the closely-watched Nonfarm Payrolls (NFP) on Friday and Fed Chair Jerome Powell's semi-annual congressional testimony on Wednesday and Thursday. This, in turn, warrants some caution before positioning for any further near-term appreciating move for the GBP/USD pair.
In the meantime, there isn't any relevant market-moving data due for release on Monday, either from the UK or the US, leaving spot prices at the mercy of the USD price dynamics. That said, the US bond yields, along with the broader risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.
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