GBP/USD jumps to 1.3700 neighbourhood, fresh session tops

The GBP/USD pair shot to fresh daily tops during the early European session, though lacked any follow-through and remained below the 1.3700 mark.

The pair attracted some dip-buying on the first day of a new trading week and rallied over 35 pips from the daily swing lows, near the 1.3660-55 region. The uptick allowed the GBP/USD pair to recover a part of Friday's losses and was sponsored by a subdued US dollar price action.

The prevalent risk-on mood – as depicted by an extension of the bullish run in the equity markets – was seen as a key factor that dented demand for the safe-haven USD. Apart from this, a modest pullback in the US Treasury bond yields further acted as a headwind for the greenback.

That said, worries about potential risks from the debt crisis at China Evergrande Group and prospects for an early rate hike by the Fed helped limit the USD losses. It is worth recalling that the Fed's so-called dot plot indicated policymakers' inclination to raise interest rates in 2022.

This, in turn, kept a lid on any meaningful gains for the GBP/USD pair, warranting caution for bullish traders. In the absence of any relevant market moving economic releases from the UK, it will be prudent to wait for some follow-through buying before positioning for any further gains.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders data. This, along with scheduled speeches by a slew of influential FOMC members, will influence the USD price dynamics and provide some trading impetus to the GBP/USD pair.

Later during the US session, traders will further take cues from the Bank of England Governor Andrew Bailey's speech for some meaningful trading opportunities around the GBP/USD pair.

Technical levels to watch