GBP/USD jumps to 1.3900 neighbourhood, near two-week tops amid notable USD supply

The emergence of some fresh USD selling during the early European session pushed the GBP/USD pair to near two-week tops, around the 1.3885-90 region in the last hour.

Following a modest bearish gap opening on the first day of a new trading week, the pair attracted some dip-buying and turned positive for the sixth consecutive session. The strong move up allowed the GBP/USD pair to build on last week's solid rebound from the 100-day SMA support, near the 1.3670 area and was exclusively sponsored by the prevalent bearish sentiment around the US dollar.

Despite the incoming strong US economic data, investors seem convinced that the Fed will keep interest rates near zero levels for a longer period. This was evident from the recent decline in the yield on the benchmark 10-year US government bond, which sank to 1.5280% last week. This, in turn, continued undermining the greenback and was seen as a key factor driving the GBP/USD pair higher.

Meanwhile, renewed fears about another dangerous wave of coronavirus infections worldwide reduced investors' appetite for perceived riskier assets. A slight deterioration in the global risk sentiment, however, did little to lend any support to the safe-haven USD or hinder the GBP/USD pair's ongoing positive momentum back closer to the 1.3900 mark, or the highest level since April 6.

It will now be interesting to see if the GBP/USD pair is able to capitalize on the move or pauses near monthly swing highs resistance near the 1.3915-20 supply zone. In the absence of any major market-moving economic releases, either from the UK or the US, the USD price dynamics will continue to play a key role in influencing the major and allow traders to grab some short-term opportunities.

Technical levels to watch