• A strong pickup in the USD demand prompted some selling around GBP/USD on Monday.
  • The risk-on mood capped the safe-haven USD and helped limit the downside for the pair.
  • Investors now look forward to this week’s US macro data for a fresh directional impetus.

The GBP/USD pair remained on the defensive through the first half of the European session, albeit has managed to recover a few pips from the daily swing low. The pair was last seen trading around the 1.3515-20 region, down less than 0.10% for the day.

The US dollar made a solid comeback on the first trading day of the new year and failed to assist the GBP/USD pair to capitalize on its recent gains recorded over the past two weeks or so. The Fed's hawkish outlook, indicating at least three rate hikes in 2022, along with elevated US Treasury bond yields acted as a tailwind for the greenback.

It is worth recalling that the yield on the benchmark 10-year US government bond recorded the largest yearly increase since 2013 and ended 2021 above the 1.50% threshold. This, along with the worsening COVID-19 situation in the United Kingdom, further undermined the British pound and exerted some downward pressure around the GBP/USD pair.

Britain has been reporting a record number of new COVID-19 cases over the past few days, which could force the government to impose more restrictions. It is worth recalling that the UK Prime Minister Boris Johnson had said last week that ministers would keep the latest data under constant review to see if additional stricter measures are needed.

That said, the underlying bullish tone – as depicted by a generally positive tone around the equity markets – capped gains for the safe-haven greenback. This, in turn, assisted the GBP/USD pair to reverse an intraday slide to sub-1.3500 levels. The attempted recovery, however, lacked bullish conviction amid quiet holiday trading.

Nevertheless, the emergence of some dip-buying at lower levels supports prospects for an extension of the recent upward trajectory. Bulls, however, are likely to wait for a sustained strength beyond the 100-day SMA before placing aggressive bets ahead of this week's important US macro data, including the closely-watched NFP report.

Technical levels to watch

GBP/USD

Overview
Today last price 1.3517
Today Daily Change -0.0007
Today Daily Change % -0.05
Today daily open 1.3524
 
Trends
Daily SMA20 1.3326
Daily SMA50 1.342
Daily SMA100 1.3566
Daily SMA200 1.3747
 
Levels
Previous Daily High 1.355
Previous Daily Low 1.3466
Previous Weekly High 1.355
Previous Weekly Low 1.3393
Previous Monthly High 1.355
Previous Monthly Low 1.3161
Daily Fibonacci 38.2% 1.3518
Daily Fibonacci 61.8% 1.3498
Daily Pivot Point S1 1.3476
Daily Pivot Point S2 1.3428
Daily Pivot Point S3 1.3391
Daily Pivot Point R1 1.3561
Daily Pivot Point R2 1.3598
Daily Pivot Point R3 1.3646

 

 

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