- GBP/USD edged higher for the second straight day amid a modest USD pullback.
- The risk-on mood seemed to be the only factor weighing on the safe-haven USD.
- The UK Retail Sales data passed unnoticed and did little to provide any impetus.
The GBP/USD pair held on to its modest intraday gains through the early European session, albeit has retreated around 20 pips from three-day tops. The pair was last seen trading around mid-1.3700s and had a rather muted reaction to the UK monthly Retail Sales figures.
The pair built on the previous day’s goodish bounce from the 1.3670 region, or six-week lows and gained traction through the first half of the trading action on Friday. The uptick marked the second straight day of a positive move and was exclusively sponsored by a modest US dollar pullback.
Following the recent run-up to four-month tops, a generally positive risk tone prompted some profit-taking around the safe-haven USD. That said, the upbeat US economic outlook should continue to underpin the greenback and keep a lid on any meaningful upside for the GBP/USD pair.
The impressive pace of coronavirus vaccination and the passage of a massive stimulus package has been fueling expectations for a relatively faster US economic recovery. Adding to the optimism, US President Joe Biden made an ambitious pledge of administering 200 million vaccine shots in 100 days.
Moreover, Thursday’s better than expected US Jobless Claims, which fell to a one-year low of 684K, added the narrative of a relatively faster US economic recovery. This makes it prudent to wait for some strong follow-through selling before confirming that the USD has topped out in the near-term.
Apart from this, concerns about a further escalation in diplomatic tensions between the UK and China might also hold traders from placing aggressive bets around the British pound. It is worth reporting that China imposed sanctions on nine individuals and four organisations in the UK this Friday.
On the economic data front, the headline UK Retail Sales fell less than expected, by 1.1% in February, while core sale (excluding fuel) rose 2.1% MoM. Slightly better monthly readings, however, were offset by weaker yearly figures and did little to provide any fresh impetus to the GBP/USD pair.
Technical levels to watch
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