- GBP/USD gained some traction in reaction to hawkish comments by BoE’s Haldane.
- Sliding US bond yields undermined the USD and remained supportive of the move.
- Brexit jitters, COVID-19 woes kept a lid on any meaningful upside for the sterling.
The GBP/USD pair maintained its bid tone through the mid-European session, albeit lacked any follow-through buying and was last seen trading around the 1.4170-75 region.
The pair built on the previous day’s late bound from the 1.4120 region and gained some traction on Wednesday, albeit struggled to capitalize on the move. The British pound got a minor lift after the Bank of England’s (BoE) Chief Economist, Andy Haldane said there were already some pretty punchy pressures on prices. Haldane also indicated that the central bank might need to turn off the tap of its huge monetary stimulus.
On the other hand, the ongoing decline in the US Treasury bond yields kept the US dollar bulls on the defensive and further contributed to the GBP/USD pair’s intraday strength. In fact, the yield on the benchmark 10-year US government bond slipped below the key 1.50% threshold for the first time since May 7. That said, concerns that rising inflation might force the Fed to taper its bond purchases helped limit the downside for the greenback.
Apart from this, EU-UK collision over Norther Ireland protocol and talks that further easing of lockdown measures in the UK may be postponed capped any further gains for the GBP/USD pair. The EU warned of swift and firm action if the UK fails to implement its post-Brexit obligations. There are also speculations that the UK may delay plans to end restrictions fully on June 21 in light of the spread of the so-called Delta variant.
There isn’t any major market-moving economic data due for release on Wednesday, either from the UK or the US. Moreover, investors preferred to move on the sidelines ahead of Thursday’s US CPI report. This further makes it prudent to wait for a sustained move beyond the 1.4200 mark before traders start positioning for any further appreciating move.
Technical levels to watch
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