- Sustained USD selling allowed GBP/USD to gain traction for the fourth consecutive session.
- Concerns about the AstraZeneca COVID-19 vaccine might cap gains for the British pound.
- Investors now look forward to key US macro releases for some meaningful trading impetus.
The USD witnessed some fresh selling during the early European session and pushed the GBP/USD pair to the 1.3800 neighbourhood in the last hour.
Following the previous day's pullback from one-week tops, the pair regained positive traction on Thursday and might now be looking to build on this week's bounce from 100-day SMA support. This marked the fourth consecutive day of a positive move and was exclusively sponsored by sustained selling around the US dollar.
In fact, the USD Index dropped to near one-month lows amid a fresh leg down in the US Treasury bond yields. Tuesday's US CPI report reinforced the Fed's view that higher inflation will be transitory and dampened prospects for an early lift-off. This comes on the back of repeated assurances from Fed officials that rates will stay low.
The Fed Chair Jerome Powell reiterated on Wednesday that the US central bank will reduce its monthly bond purchased before it commits to an interest rate increase, which is unlikely before the end of 2022. This, in turn, dragged the yield on the benchmark 10-year US government bond further away from a 14-month peak of 1.776% touched in March.
That said, concerns about a link between the AstraZeneca COVID-19 vaccine and a rare blood clot might hold traders from placing aggressive bullish bets around the British pound. Given that the UK vaccination program relies heavily on the AstraZeneca shot, a temporary ban for the below 30 age group could delay the government's plan to reopen the economy.
This makes it prudent to wait for a sustained strength beyond the 1.3800 round-figure mark before positioning for any further appreciating move for the GBP/USD pair. Investors might also prefer to move on the sidelines and wait for a fresh catalyst from Thursday's release of the BoE's Credit Conditions Survey/important US macro data.
The US economic docket highlights the releases of monthly Retail Sales figures, Philly Fed Manufacturing Index and the usual Initial Weekly Jobless Claims. This, along with the US bond yields will influence the USD price dynamics and allow traders to grab some short-term opportunities around the GBP/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.