- GBP/USD seemed struggling to capitalize on the overnight goodish rebound from a one-year low.
- Fresh COVID-19 jitters pushed back BoE rate hike expectations and undermined the British pound.
- A modest pickup in the USD demand further held back traders from placing aggressive bullish bets.
The GBP/USD pair held steady above the 1.3200 mark through the Asian session, though the uptick lacked bullish conviction amid fresh COVID-19 jitters.
The pair struggled to capitalize on the overnight bounce from a one-year low, around the 1.3160 area and oscillated in a narrow trading band through the early part of the trading action on Thursday. The British pound was undermined by the imposition of tougher COVID-19 restrictions in England. Apart from this, a modest pickup in the US dollar demand capped any meaningful upside for the GBP/USD pair.
The UK Prime Minister Boris Johnson on Wednesday ordered people to work from home, wear masks in public places and use vaccine passes to slow the spread of the Omicron variant of the coronavirus. This comes on the back of the UK-EU impasse over the Northern Ireland Protocol, which seems to have dashed hopes for an imminent interest rate hike by the Bank of England at its meeting next week.
On the other hand, the USD continued drawing some support from growing market acceptance that the Fed would tighten its monetary policy sooner rather than later to contain stubbornly high inflation. This, along with a further recovery in the US Treasury bond yields and a cautious market mood, benefitted the safe-haven greenback and held back traders from placing bullish bets around the GBP/USD pair.
The fundamental backdrop seems tilted firmly in favour of bearish traders, suggesting that the attempted recovery might still be seen as a selling opportunity. In the absence of any major market-moving economic releases, either from the UK or the US, the USD price dynamics will continue to influence the GBP/USD pair and allow traders to grab some short-term opportunities.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.