GBP/USD closes in on 1.4200 as USD struggles to find demand
- GBP/USD edges higher toward 1.4200 during the American session.
- US Dollar Index remains on track to close below 90.00.
- EU official says patience is wearing thin with UK on N. Ireland.
The GBP/USD started the new week on a weak footing and declined toward 1.4100 in the early trading hours of the European session. However, the pair reversed its direction with the renewed USD weakness and was last seen gaining 0.25% on the day at 1.4190.
DXY looks to end the day in the negative territory
Earlier in the day, the USD capitalized on the rebounding Treasury bond yields and the US Dollar Index (DXY) reached a daily high of 90.30 before losing its traction. In the absence of significant fundamental drivers and high-tier data releases, the DXY dropped below 90.00, suggesting that Friday's uninspiring Nonfarm Payrolls report continues to hurt the currency.
There won't be any data releases from the UK on Tuesday. Later in the day, Goods Trade Balance and the NFIB Business Optimism Index from the US will be looked upon for fresh impetus.
Meanwhile, an EU official told Reuters on Monday that the EU's patience was wearing thin with the UK with regard to the Northern Ireland Protocol. "The EU has been patient but the EU's patience is wearing thin. If this continues, we will have to consider all the tools, all the options that are available," the official said.
Although the USD's market valuation is likely to continue to impact GBP/USD's movements in the near term, escalating political tensions between the EU and the UK could force the British pound to weaken against its major rivals.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
