- GBP/USD witnessed some selling on Friday and extended the overnight pullback from weekly tops.
- A generally softer risk tone provided a modest lift to the safe-haven USD and exerted some pressure.
- UK political noise, the Scottish elections risk weighed on the GBP and contributed to the selling bias.
The GBP/USD pair refreshed daily lows during the early European session, with bears now awaiting a sustained break below the 1.3900 round-figure mark.
The pair extended the previous day's retracement slide from over one-week tops, around the 1.3975 region and witnessed some selling on the last trading day of the week. This marked the first day of a negative move in the previous six trading sessions and was sponsored by a modest US dollar strength.
As investors looked past the Fed's dovish message, the overnight strong pickup in the US Treasury bond yields assisted the USD to rebound from the lowest level since February 26. Apart from this, a generally softer tone around the equity markets provided an additional lift to the safe-haven USD.
The British pound was further undermined by the risk posed by the Scottish elections next week. Polls are pointing to a supermajority for pro-independence parties in Scotland's parliament, which might intensify pressure for a referendum on independence and act as a headwind for the sterling.
This comes on the back of controversy over funding arrangement for the UK Prime Minister Boris Johnson's official apartment. This, in turn, largely offset the optimism over a strong recovery in the UK – bolstered by the easing of COVID-19 restriction and kept the GBP bulls on the defensive.
Meanwhile, the upside for the USD is likely to remain limited amid firming expectations that the Fed will keep interest rates near zero levels for a longer period. This, in turn, makes it prudent to wait for some follow-through selling before positioning for any meaningful downside for the GBP/USD pair.
There isn't any major market-moving economic data due for release from the UK, leaving the GBP/USD pair at the mercy of the USD price dynamics. Later during the early North American session, traders might take cues from the US data – March Personal Income/Spending data, Core PCE Price Index and revised Michigan Consumer Sentiment Index for April.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds positive ground above 1.0700, eyes on German CPI data
EUR/USD trades on a stronger note around 1.0710 during the early Monday. The weaker US Dollar below the 106.00 mark provides some support to the major pair. All eyes will be on the Federal Reserve monetary policy meeting on Wednesday, with no change in rate expected.
USD/JPY extends recovery after testing 155.00 on likely Japanese intervention
USD/JPY is recovering ground after crashing to 155.00 on what seemed like a Japanese FX intervention. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
Gold price bulls move to the sidelines as focus shifts to the crucial FOMC policy meeting
Gold price (XAU/USD) struggles to capitalize on its modest gains registered over the past two trading days and edges lower on the first day of a new week, albeit the downside remains cushioned.
XRP plunges to $0.50, wipes out recent gains as Ripple community debates ETHgate impact
Ripple loses all gains from the past seven days, trading at $0.50 early on Monday. XRP holders have their eyes peeled for the Securities and Exchange Commission filing of opposition brief to Ripple’s motion to strike expert testimony.
Week ahead: FOMC and jobs data in sight
May kicks off with the Federal Open Market Committee meeting and will be one to watch, scheduled to make the airwaves on Wednesday. It’s pretty much a sealed deal for a no-change decision at this week’s meeting.