GBP/USD teases 1.3900 on softer USD, risk-on mood

GBP/USD starts the new trading week on a muted note.
US Dollar Index trades below three-month as risk sentiment improves.
US Treasury yields rebound from the sub 1.30% level.

Rekha Chauhan Independent Analyst

After rebounding from the low of 1.3756 on Friday, the GBP/USD pair kicked off the new trading week on a subdued note. The pair rallied to the high of 1.3909 in a 150-pips movement. The greenback turns negative in the initial Asian trading hours on Monday.

At the time of writing, the GBP/USD pair is trading at 1.3901, up 0.01% for the day.

The US Dollar Index, which tracks the performance of the greenback against its six major rivals, trades at 92.10 with 0.33% losses for the day. The US 10-year benchmark yields retreat slightly lower, undermining the demand for the US dollar.

The US Federal Reserve’s twice-a-year report to Congress on monetary policy was released on Friday, which reaffirmed Fed’s commitment toward economic growth. The central bank maintained its stance on low-interest rates until further progress was made in recovering from last year’s economic setback due to the pandemic.

On the other hand, the sterling gains were offset by a fresh row of a tussle between the UK and EU over a new post-Brexit divorce bill. The EU represented a new total bill of £40.8bn being rejected by Downing Street.

Meantime, as per the Deloitte survey, big corporations in Britain are rushing ahead with a post-lockdown investment plan that could help in the recovery of the country’s weak productivity growth.

Author

Rekha Chauhan

Independent Analyst

Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.

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