GBP/USD rebounds from near three-week lows, steadily climbs back to 1.4120 area

The GBP/USD pair managed to rebound around 35-40 pips from near three-week lows touched earlier this Friday and was last seen trading near the 1.4120 area during the early European session.

The pair once again showed some resilience below the 1.4100 round figure and attracted some dip-buying on the last trading day of the week. The British pound remained well supported by the optimistic outlook for the UK economic recovery from the pandemic, bolstered by the gradual easing of lockdown measures. It is worth reporting that the British government is all set to go ahead with its plan to fully end restrictions from June 21.

Apart from this, indications that the Bank of England could raise rates well into next year acted as a tailwind for the sterling. the BoE policymaker Gertjan Vlieghe indicated last week that the central bank was likely to raise rates earlier if the economy rebounds more quickly than expected. That said, a modest US dollar strength might hold bulls from placing aggressive bets and cap gains for the GBP/USD pair.

Thursday's upbeat US macro releases indicated that the US recovery is gathering pace. The stronger data further fueled speculations that the Fed may bring forward the timeline for tapering its bond purchases. Hence, the market focus will remain glued to the US monthly jobs report (NFP), which will be one of the most important pieces of economic data that would set the tone for the upcoming FOMC meeting later this month.

Heading into the key data risk, investors might be reluctant to place any aggressive bets. This, in turn, might keep a lid on any further gains for the GBP/USD pair, at least for the time being.

Technical levels to watch