- GBP/USD continued scaling higher for the fourth consecutive session on Wednesday.
- The British pound was underpinned by hopes for a possible last-minute Brexit deal.
- COVID-19 jitters weighed on the USD and remained supportive of the positive move.
The GBP/USD pair climbed to fresh one-week tops during the early European session, with bulls now eyeing a move towards reclaiming the 1.3300 round-figure mark.
A combination of supporting factors assisted the pair to build on last week's rebound from the vicinity of the 1.3100 mark and gain traction for the fourth consecutive session. Concerns about the potential economic fallout from new COVID-19 restrictions in several US states tempered the latest optimism around promising vaccine trails. This, along with the ongoing slide in the US Treasury bond yields kept the US dollar bulls on the defensive through the first half of the trading action on Thursday.
On the other hand, the British pound remained well supported by hopes that Britain and the European Union could reach a Brexit divorce agreement by the beginning of next week. Adding to this, Wednesday's mostly upbeat UK consumer inflation figures provided an additional boost to the GBP/USD pair and remained supportive. However, the fact that negotiators are yet to find a compromise on key sticking points, including fisheries, held the GBP bulls from placing aggressive bets and might cap the upside.
It is worth reporting that EU negotiators are reportedly due to update envoys of the bloc's 27 member states on the latest in trade talks with Britain at 0700 GMT on Friday. This makes it prudent to wait for some strong follow-through buying, possibly beyond the 1.3310-15 region, before positioning for an extension of the recent bullish trajectory.
Market participants now look forward to the US economic docket – featuring the releases of Building Permits and Housing Starts – for a fresh impetus later during the early North American session. The data, along with developments surrounding the coronavirus saga and the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Latest Forex News
Editors’ Picks
EUR/USD hits fresh one-month low amid souring market mood
EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points.
GBP/USD retreats toward 1.36 amid fresh dollar strength
GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown.
Gold extends sideways grind near $1,850
The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.
Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed
Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative.
DXY breaks above key downtrend, eyes move above 91.00
USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.