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  • GBP/USD struggled to preserve its intraday gains to two-day tops, around the 1.3670 region.
  • A modest intraday USD bounce was seen as a key factor exerting some pressure on the major.
  • Disappointing US ADP report capped the attempted USD recovery ahead of the FOMC minutes.

The GBP/USD pair retreated around 70 pips from daily swing highs and dropped to the 1.3600 neighbourhood in the last hour, albeit quickly recovered few pips thereafter. The pair was last seen trading around the 1.3625-30 region, nearly unchanged for the day.

The British pound witnessed some selling after the UK Prime Minister Boris Johnson said this Wednesday that the end of the lockdown will not be a big bang and that it will be a slow unravelling. It is worth recalling a third nationwide lockdown in the UK is already in place at least until February 15.

The comments added to growing market concerns about the potential economic fallout from stricter restrictions and might have also boosted prospects for additional monetary easing by the BoE. Hence, market participants will keep a close eye on the BoE Governor Andrew Bailey’s speech later today.

On the other hand, the US dollar staged a modest recovery from two-and-half-year lows, albeit lacked any strong follow-through. Expectations of a Democratic victory in the crucial US Senate runoff elections in the stage of Gerogis have raised prospects for additional US fiscal stimulus.

This, along with speculations that the Fed will keep interest rates lower for a longer period, might hold the USD bulls from placing aggressive bets. On the US economic data front, the disappointing release of the ADP report also did little to provide any meaningful impetus to the greenback.

This, in turn, helped limit any further decline for the GBP/USD pair as market participants now look forward to the release of the latest FOMC meeting minutes. Investors will closely scrutinize the minutes for clues about the Fed’s policy outlook, which will influence the near-term USD dynamics.

Technical levels to watch