GBP/USD clings to multi-month low near 1.3700 on firmer US dollar

GBP/USD edges lower on Monday following the previous week’s downside momentum. The pair opened higher but failed to capitalize the upside momentum and skids towards the multi-month low near 1.3700.

As of writing, GBP/USD is trading at 1.3709, down 0.23% for the day.

The movement in GBP/USD is primarily sponsored by the gains in the greenback. Buoyed by the better-than-expected economic data and the concerns about the rapid increase of the Delta variant of coronavirus cases globally pushed demand for the US dollar owing to its safe-haven appeal.

The US Dollar Index (DXY), which tracks the performance of the greenback against its six major rivals, trades above 93.00 ahead of the FOMC two-day meeting later in the week.

On the other hand, the sterling remained on the back foot as investors remained nervous about the UK inflation growth. A higher inflation reading could force the Bank of England (BOE) to raise interest rates and crunch the already ailing economy. 

The data released earlier in the month revealed that the UK economy grew by just 0.1% in July, the pace of the growth was lower than the 1% growth in the previous month.    

Meanwhile, US House of Representatives Speaker Nancy Pelosi warned Britain on destabilizing Northern Ireland’s (NI) peace and said there will be no US-UK trade deal before the British government resolved Brexit disagreement with the European Union (EU).

GBP/USD additional levels