GBP/USD dives to fresh multi-week lows amid sustained USD buying
- GBP/USD remained under some heavy selling pressure amid a broad-based USD strength.
- The Fed’s hawkish turn, the risk-off mood continued boosting the safe-haven greenback.
- COVID-19/Brexit jitters weighed on the British pound and contributed to the selling bias.
The USD buying picked up pace during the early North American session and dragged the GBP/USD pair to fresh multi-week lows, around the 1.3845 region in the last hour.
The pair extended this week's post-FOMC bearish breakdown momentum and remained under some heavy selling pressure on the last trading day of the week. This marked the sixth consecutive session of downfall – also the eighth day of a negative move in the previous nine – and was sponsored by a combination of factors.
Investors remain worried that the government's decision to delay the final stage of easing lockdown measures to July 19 could hinder the nascent economic recovery. The concerns were further fueled by Friday's weaker UK macro data, showing that the overall and core Retail sales declined 1.4% and 2.1%, respectively, in May.
This comes on the back of concerns about the EU-UK collision over Norther Ireland protocol, which continued acting as a headwind for the British pound. Apart from this, the prevalent strong bullish sentiment surrounding the US dollar was seen as another factor that contributed to the GBP/USD pair's downward trajectory.
The greenback remained well supported by the Fed's sudden hawkish turn and shot to over two-month tops. The already stronger buck got an additional boost after St. Louis Fed President James Bullard, speaking to CNBC, said that the Fed Chairman Jerome Powell officially opened taper discussion at the last meeting.
Meanwhile, a selloff in the global equity market further benefitted the greenback's relative safe-haven status, which, to a larger extent, offset a fresh leg down in the US Treasury bond yields. This, along with a sustained break below 100-day SMA, further aggravated the intraday bearish pressure around the GBP/USD pair.
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Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
