- GBP/USD caught some aggressive bids on Thursday and jumped back closer to multi-year tops.
- Retreating US bond yields undermined the USD and remained supportive of the strong move up.
- Technical buying on a sustained move beyond the 1.3900 mark contributed to the momentum.
The GBP/USD pair continued scaling higher through the mid-European session and surged back closer to 34-months, around mid-1.3900s touched earlier this week.
The pair attracted aggressive buying near 200-hour SMA support and rallied over 100 pips amid the emergence of fresh selling around the US dollar. As investors looked past Wednesday’s upbeat US macro data, a modest pullback in the US Treasury bond yields exerted some downward pressure on the greenback. The US bond yields started retreating from one-year tops after the FOMC meeting minutes reaffirmed the Fed’s ultra-accommodative monetary policy stance.
On the other hand, the British pound remained well supported by the impressive pace of coronavirus vaccinations in the UK. This would allow Prime Minister Boris Johnson to lift COVID-19 restrictions and get the economy moving. Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 1.3900 round-figure mark further contributed to the GBP/USD pair’s strong intraday positive momentum.
Meanwhile, progress on the US President Joe Biden’s proposed $1.9 trillion stimulus package, along with the slowing pace of COVID-19 infections in the US have been fueling hopes for a relatively stronger US economic recovery. This, along with expectations for an acceleration in inflation, might limit any meaningful downside for the US bond yields, which might continue to lend support to the greenback and keep a lid on any further gains for the GBP/USD pair.
Market participants now look forward to the US economic docket, featuring Philly Fed Manufacturing Index, the usual Initial Weekly Jobless Claims and housing market data. Traders might further take cues from the US bond yield dynamics, which will play a key role in influencing the USD price dynamics and produce some short-term opportunities around the GBP/USD pair.
Technical levels to watch
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