GBP/USD clings to modest daily gains near 1.2500

• GBP/USD goes into consolidation following an early spike.
• US Dollar Index stays quiet near 99.50 area.
• Coronavirus-related deaths in the UK rose above 11K.

The GBP/USD pair advanced to its highest level in a month at 1.2537 during the early trading hours of the European session on Monday but struggled to preserve its momentum amid thin holiday trading conditions. Nevertheless, the pair continues to hold a little above the 1.2500 mark, adding around 0.5% on a daily basis.

USD valuation drives the pair

The selling pressure surrounding the USD last week helped the pair push higher. After the Federal Reserve announced new policy measures to provide up to $2.3 trillion in loans to help the economy, the US Dollar Index (DXY) erased nearly 1% in the second half of the week to close at 99.48. Although the DXY edged lower toward 99 on Monday, the risk-averse market environment allowed it to return to the 99.50 area during the American session.

Meanwhile, the latest data published by the British health ministry revealed that the total number of confirmed coronavirus infections climbed to 88,621 and the death toll increased by 717 to 11,329. Nevertheless, the market reaction to these figures was relatively muted.

There won’t be any significant macroeconomic data releases from the UK in the remainder of the week and the DXY’s performance could continue to impact the pair’s movements. The only data featured in the US economic docket on Tuesday will be the Import and Export Price Index.

Technical levels to watch for