GBP/USD clings to modest gains around 1.4130-35 region, lacks follow-through

The GBP/USD pair held on to its modest gains through the early North American session, albeit lacked any follow-through buying and remained below mid-1.4100s.

The pair stalled the previous day's corrective slide from the 1.4200 mark and regained some positive traction on Thursday amid the emergence of some fresh selling around the US dollar. Despite hints that the Fed has begun debating on QE tapering, the USD struggled to gain any meaningful traction amid a sharp pullback in the US Treasury bond yields.

The USD remained depressed and failed to gain any respite from mixed US macro releases. The US Initial Weekly Jobless Claims fell to 444K during the week ended May 15 as against 450K anticipated. This, however, was overshadowed by the Philly Fed Manufacturing Index, which dropped more than expected to 31.5 in May from 50.2 in the previous month.

On the other hand, the British pound was supported by the upbeat outlook for the UK economic recovery, bolstered by the gradual easing of lockdown measures. The UK Prime Minister Boris Johnson said on Tuesday that there is nothing conclusive yet to indicate that the Indian variant would force Britain to deviate from its plan to end restrictions fully on June 21.

That said, the prevalent cautious mood around the equity markets extended some support to the safe-haven USD. Apart from this, the uncertainty over the post-Brexit agreement on Northern Ireland held bulls from placing aggressive bets and kept a lid on any further gains for the GBP/USD pair. This, in turn, warrants some caution before placing aggressive bullish bets.

Technical levels to watch