- GBP/USD once again failed ahead of the 1.4200 mark and met with some fresh supply on Friday.
- COVID-19 jitters, Brexit woes continued weighing on the British pound and exerted some pressure.
- Resurgent USD demand was seen as another factor that contributed to the intraday selling bias.
The GBP/USD pair extended its steady intraday descent through the early North American session and dropped to fresh daily lows, around the 1.4140-35 region in the last hour.
The pair struggled to capitalize on the previous day's solid bounce of over 100 pips from the 1.4075-70 region, or four-week lows and once again failed ahead of the 1.4200 mark. Investors remain worried that the UK may delay its plans to end restrictions fully on June 21 in light of the spread of the so-called Delta variant. Apart from this, the EU-UK collision over Norther Ireland protocol acted as a headwind for the British pound and prompted some fresh selling around the GBP/USD pair.
On the other hand, the US dollar made a strong comeback following the post-US CPI slide on Thursday and shot to over one-week tops. This, in turn, was seen as another factor that exerted some additional downward pressure on the GBP/USD pair. The USD bulls seemed unaffected by the ongoing slide in the US Treasury bond yields, fueled by the growing market conviction that the Fed will retain its ultra-lose policy stance for a longer period despite signs of rising inflationary pressure.
From a technical perspective, the emergence of some fresh selling near the 1.4185-90 supply zone favours bearish traders and supports prospects for further near-term losses. That said, it will still be prudent to wait for some follow-through selling below the 1.4100 mark before positioning for an extension of the depreciating move. This will further suggest that the GBP/USD pair has topped out in the near term and pave the way for a slide to test the key 1.4000 psychological mark.
Market participants now look forward to the release of the Preliminary Michigan US Consumer Sentiment index for some impetus. The key focus, however, will remain on the upcoming FOMC policy meeting on June 15-16. This will play a key role in influencing the near-term USD price dynamics and help investors to determine the next leg of a directional move for the GBP/USD pair.
Technical levels to watch
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