- GBP/USD witnessed some selling on Tuesday and snapped two consecutive days of the winning streak.
- COVID-19 jitters, Brexit woes weighed on the British pound and exerted some pressure on the major.
- A modest USD strength also contributed to the intraday selling bias amid the prevalent cautious mood.
The GBP/USD pair maintained its offered tone through the early North American session and was last seen trading just below mid-1.4100s, few pips above daily swing lows.
The pair struggled to capitalize on its gains recorded over the past two trading sessions and once again started retreating from the vicinity of the 1.4200 round-figure mark. The downtick forced the GBP/USD pair to reverse the previous day’s positive move and was sponsored by a combination of factors.
Doubts that the spread of the so-called Delta variant could disrupt the UK government’s reopening plans on June 21 acted as a headwind for the British pound. This comes amid indications that Britain’s relationship with the European Union has been souring and prompted some fresh selling around the GBP/USD pair.
In a further escalation of a dispute over the Northern Ireland protocol, the EU reportedly is considering tougher retaliatory measures if the UK government fails to implement its post-Brexit obligations. Adding to this, a modest US dollar strength was seen as another factor weighing on the GBP/USD pair.
Friday’s softer US NFP prints tempered market expectations for an earlier than anticipated lift-off, which was evident from the ongoing decline in the US Treasury bond yields. That said, concerns that rising inflationary pressure might force the Fed to start the discussion on tapering its asset purchases extended some support to the greenback.
Hence, the key focus will remain on Thursday’s release of the US CPI report, which will be another piece of important macro data that would set the tone for the upcoming FOMC meeting on June 15-16. Investors might refrain from placing aggressive bets heading into the key data risk. This could help limit the downside for the GBP/USD pair.
Technical levels to watch
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