GBP/USD remains depressed near two-week low around 1.3535, post-UK PMIs

The GBP/USD pair is trading depressed through the early part of the European session and was last seen near a two-week low, around the 1.3535 region post-UK PMIs.

The pair extended its recent pullback from the vicinity of mid-1.3700s, or a two-month high, and witnessed some selling for the third successive day on Monday. This also marked the sixth day of a negative move in the previous seven and was sponsored by a combination of factors.

Growing demands for Prime Minister Boris Johnson's resignation over a series of lockdown parties in Downing Street continued undermining the British pound. Apart from this, the emergence of some US dollar buying further contributed to the offered tone surrounding the GBP/USD pair.

On the economic data front, the flash version of the UK PMIs fell short of market expectations and showed that expansion in both the manufacturing and the services sectors slowed notably in January. The data did little to impress bulls or lend any support to the GBP/USD pair.

Increasing expectstions of additional rate hikes by the Bank of England held back traders from placing aggressive bearish bets around sterling. A fresh leg down in US Treasury bond yields capped the USD gains and helped limit losses for the GBP/USD pair.

Investors also seemed reluctant and preferred to wait on the sidelines ahead of the key central bank event risk – the outcome of a two-day FOMC policy meeting on Wednesday. This makes it prudent to wait for a strong follow-through selling before positioning for any further decline.

Moving ahead, market participants will now look to the release of the flash US PMI prints, due later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair.

Technical levels to watch