GBP/USD bulls await a sustained move beyond 1.3700 mark

The GBP/USD pair held on to its modest intraday gains through the first half of the European session, with bulls still awaiting a sustained move beyond the 1.3700 mark.

The pair gained some follow-through traction for the second consecutive session on Wednesday and added to the overnight strong positive move, led by the Bank of England Governor Andrew Bailey's remarks. During his online speech to the Scottish Chambers of Commerce, Bailey downplayed speculations on negative interest rates and provided a strong lift to the British pound.

Bailey said that there are a lot of issues with negative interest rates and that it was too soon to reach any conclusion about the need for future stimulus. Bailey's comments indicated that the BoE is more likely to wait and see how the economy reacts to Brexit and the third lockdown in the UK before deciding on anything.

On the other hand, the ongoing retracement in the US Treasury bond yields kept the US dollar bulls on the defensive and remained supportive of the bid tone surrounding the GBP/USD pair. The recent strong rally in the US bond yields lost some steam in reaction to the strong demand seen at a $38 billion 10-year auction overnight.

Adding to this, the Fed officials reiterated that the monetary policy is going to remain accommodative. The greenback was further pressured by the underlying bullish sentiment in the financial markets, which remained well supported by hopes for a strong global economic recovery in 2021 and additional US fiscal stimulus measures.

There isn't any major market-moving economic data due for release from the UK on Wednesday. Meanwhile, the US economic docket highlights the release of consumer inflation figures. This, along with the US bond yields and the market risk sentiment, will influence the USD price dynamics and provide some impetus to the GBP/USD pair.

Technical levels to watch