- GBP/USD regained positive traction on Monday and recovered a part of Friday’s losses.
- Improving COVID-19 situation in the UK, positive Brexit new underpinned the sterling.
- A subdued USD demand remained supportive ahead of the final UK Manufacturing PMI.
The GBP/USD pair edged higher during the European session and climbed to fresh daily tops, around the 1.3925-30 region in the last hour.
A combination of factors assisted the GBP/USD pair to catch some fresh bids on the first day of a new trading week and recover a part of Friday's retracement slide from over one month tops. The British pound remained well supported by the declining trend in Delta variant infections in the UK.
In fact, Britain recorded reported 24,470 new cases of COVID-19 on Sunday. This comes on the back of the recent positive Brexit-related development, which further acted as a tailwind for the sterling. Apart from this, a subdued US dollar demand provided a modest lift to the GBP/USD pair.
It is worth recalling that the European Union had rejected the UK's proposals designed to solve the Northern Ireland protocol dispute. However, the EU later decided to pause legal proceedings against the UK, which turned out to be a key factor behind the pound's outperformance last week.
On the other hand, the USD languished near one-month lows amid firming expectations that the Fed will stick to its ultra-lose monetary policy stance for a longer period. Apart from this, sliding US Treasury bond yields and a generally positive risk tone further undermined the safe-haven USD.
Market participants now look forward to the release of the final UK Manufacturing PMI. Later during the early North American session, the US ISM Manufacturing PMI will also be looked upon for some short-term trading opportunities ahead of this week's key event/data risk.
The Bank of England is scheduled to announce its monetary policy decision on Thursday. From the US, the release of the closely-watched US monthly jobs report (NFP) will play a key role in influencing the USD price dynamics and provide a fresh directional impetus to the GBP/USD pair.
Technical levels to watch
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