- GBP/USD gains some traction on Monday and snapped three days of losing streak.
- The uptick was led by a modest USD pullback, albeit lacked any strong follow-through.
- It will be prudent to wait for a move beyond the 1.2200 mark before placing bullish bets.
The GBP/USD pair edged higher through the early North American session and was last seen trading near the top end of its daily trading range, just below the 1.2200 mark.
The pair managed to regain some positive traction on the first day of a new trading week and for now, seems to have snapped three consecutive days of losing streak. The uptick lacked any fresh fundamental catalyst and was sponsored by a modest US dollar pullback.
The prevalent risk-on mood undermined the greenback’s safe-haven status and turned out to be one of the key factors that extended some support to the GBP/USD pair. However, concerns about worsening US-China relations might help limit any meaningful USD downfall.
China formally tabled national security laws for both Hong Kong and Macau. This comes after the US President Donald Trump threatened to take strong action if the law is passed and continued fueling worries about a major US-China tussle.
Meanwhile, expectations that the Bank of England might be eyeing the introduction of negative interest rates for the first time in history and persistent Brexit uncertainties might further contribute towards capping the GBP/USD pair.
Investors might also refrain from placing any aggressive bets amid thin liquidity on the back of public holidays in the UK and the US. Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move.
Even from a technical perspective, the pair has been struggling to make it through the 200-hour SMA. The mentioned barrier coincides with the 1.2200 round-figure mark, which should now act as a key pivotal point for short-term traders.
Technical levels to watch
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