GBP/USD under pressure below 1.3700 ahead of key UK data

Having faced rejection at 1.3700 on several occasions in Friday’s Asian trading so far, GBP/USD is consolidating the overnight gains led by broad-based US dollar sell-off.

The greenback got sold-off into the Fed Chairman Jerome Powell’s comments on the interest rates after he said that the time to raise the interest rates is no time soon.

Meanwhile, President-elect Joe Biden’s COVID-19 rescue plan also failed to impress the dollar bulls, as they struggled amid weaker Treasury yields. The US dollar index trades modestly flat around 97.25, having hit session lows at 97.18.

Further, the cable also draws support from some optimism around the coronavirus situation in the UK after said Wednesday that tougher restrictions brought in last week were starting to have an effect on the spread of COVID in some parts of the country.

On Thursday, Johnson’s spokesperson said that they are considering measures to prevent the introduction of the Brazilian COVID variant.

Also, favoring the GBP bulls are the market expectations that the Bank of England (BOE) will likely keep the interest rates unchanged at least until 2024 to avoid negative rates, according to the latest Reuters poll.

This coincides with the BOE Governor Andrew Bailey’s recent speech, in which he dismissed negative rates, calling it a controversial issue.

Markets are now looking forward to a bunch of critical UK economic releases, including the monthly GDP figures and industrial output data. Also, of note remains the US Retail Sales and Michigan Consumer Sentiment data, as the second week of 2021 draws to an end.

At the time of writing, GBP/USD drops 0.07% on a daily basis to 1.3676, having hit the highest levels since May 2018 at 1.3710 on Thursday. The spot appears to revisit the session lows reached at 1.3671.

GBP/USD technical levels