GBP/USD climbs back above 1.3600 mark, closer to overnight swing highs

The GBP/USD pair bounced over 40 pips from the early European session lows and climbed to fresh daily tops, around the 1.3625 region in the last hour.

Following an intraday dip to the 1.3585 area, the GBP/USD pair attracted fresh buying on Tuesday and turned positive for the fourth successive day. The US dollar trimmed a part of its intraday gains amid signs of stability in the equity markets and a modest intraday pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that pushed the pair back closer to multi-day tops touched in the previous session, though any meaningful positive move still seems elusive.

Firming market expectations that the Fed would begin rolling back its massive pandemic-era stimulus and raise interest rates in 2022 might continue to act as a tailwind for the USD. Apart from this, worries that the continuous surge in crude oil/energy prices will stoke inflation and derail the global economic recovery might further underpin the greenback's relative safe-haven status. This, along with the ongoing fuel crisis in the United Kingdom, might cap gains for the GBP/USD pair.

Britain's supply chains have been strained to breaking point by shortages of lorry drivers in the wake of the Brexit and COVID-19 crises. Panic buying of fuel triggered chaotic scenes across major cities last week, forcing the government to send the army to work on delivering gasoline and diesel to filling stations. This, in turn, might hold bulls from placing aggressive bets and keep a lid on any runaway rally for the GBP/USD pair amid absent relevant market moving economic releases from the UK.

On the economic data front, the UK Services PMI for September was revised higher to 55.4 from the 54.6 flash reading. Market participants now look forward to the US economic docket, highlighting the release of ISM Services PMI later during the early North American session. The USD bulls will further take cues from a scheduled speech by Fed Governor Randal Quarles and the US bond yields. This, along with the broader market risk sentiment, could produce some trading opportunities around the GBP/USD pair.

Technical levels to watch