- A modest pickup in the USD demand prompted some selling around GBP/USD on Tuesday.
- The risk-on mood, dovish Fed expectations to cap the USD and help limit losses for the pair.
The GBP/USD pair traded with a mild negative bias through the early European session and was last seen hovering near the lower boundary of its intraday trading range, around the 1.3880 region.
The pair edged lower during the first part of the trading action on Tuesday and retreated further from the overnight swing highs, around the 1.3930 region. The US dollar found some support from a modest pickup in the US Treasury bond yields. This, in turn, was seen as a key factor that exerted some pressure on the GBP/USD pair.
That said, the underlying bullish tone in the financial markets held the USD bulls from placing any aggressive bets. Apart from this, firming expectations that the Fed will keep interest rates low for a longer period might further contribute to cap gains for the greenback and help limit any further losses for the GBP/USD pair.
There isn't any major market-moving economic data due for release from the UK, while the US economic docket features the release of the Conference Board's Consumer Confidence Index. This further makes it prudent to wait for some strong follow-through selling around the GBP/USD pair before positioning for any further depreciating move.
Investors might also refrain from placing aggressive bets, rather prefer to wait on the sidelines ahead of the latest FOMC monetary policy decision on Wednesday. This will be followed by the release of the Advance US Q1 GDP report, which will play a key role in influencing the USD and provide a fresh directional impetus to the GBP/USD pair.
Technical levels to watch
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