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  • GBP/USD struggled to capitalize on its intraday uptick to levels beyond the 1.3700 mark.
  • An upward revision of the UK Manufacturing PMI also did little to impress the GBP bulls.

The GBP/USD pair retreated around 30-35 pips from the highest level since April 2018, albeit has still managed to preserve modest gains around the 1.3670-65 region.

The pair attracted some dip-buying near the 1.3640 region and quickly filled a modest weekly bearish gap opening on the first trading day of 2021. The prevalent bearish sentiment surrounding the US dollar was seen as one of the key factors that assisted the GBP/USD to regain positive traction.

Investors have been betting on a strong global economic recovery amid the likelihood of additional US financial aid package. This, along with expectations that the Fed will keep rates lower for a longer period, remained supportive of the upbeat market mood and continued weighing on the safe-haven USD.

However, investors remain concerns about the exclusion of the crucial UK services sector – which make up 80% of the British economy – from the Brexit agreement. This comes on the back of an unprecedented level of COVID-19 infection in the UK, which, in turn, held the GBP bulls from placing fresh bets.

Meanwhile, the final version of the UK Manufacturing PMI for December was revised higher to 57.5 from 57.3 flash estimate. The data, however, did little to provide any meaningful impetus or assist the GBP/USD pair to build on its recent strong bullish momentum further beyond the 1.3700 mark.

This makes it prudent to wait for some follow-through buying beyond the mentioned level before positioning for any further near-term appreciating move. Traders now look forward to the release of the final US Manufacturing PMI for a fresh impetus later during the early North American session.

Technical levels to watch