GBP/USD eases from multi-year tops, downside seems limited

The GBP/USD pair fell over 40 pips during the early European session and refreshed daily lows, around the 1.3815 region in the last hour.

The pair struggled to preserve its modest intraday gains and started retreating from the vicinity of near three-year tops, around the 1.3860-65 region touched on Wednesday. The pullback could be solely attributed to some profit-taking and is likely to remain limited amid absent relevant fundamental catalyst.

The British pound might continue to benefit from the UK's lead in terms of the coronavirus vaccination drive, which could facilitate an earlier easing of lockdown restrictions. Adding to this, diminishing odds for any BoE interest rate cut could further underpin the sterling and extend some support to the GBP/USD pair.

On the other hand, the US dollar languished near two-week lows amid the prevalent risk-on mood and was also pressured by a subsequent fall in US Treasury bond yields. This, along with Wednesday's weaker US consumer inflation figures and dovish comments by the Fed Chair Jerome Powell, might keep the USD bulls on the defensive.

This, in turn, warrants some caution for bearish traders and before positioning for a meaningful corrective fall around the GBP/USD pair. Hence, any further decline below the 1.3800 round-figure mark might still be seen as a buying opportunity and find decent support near the 1.3760-55 strong resistance breakpoint.

Market participants now look forward to the US economic docket, highlighting the release of the usual Initial Weekly Jobless Claims data. Apart from this, the broader market risk sentiment and the US bond yields might influence the USD price dynamics, and produce some short-term trading opportunities around the GBP/USD pair.

Technical levels to watch