- GBP/USD remains under some selling pressure for the second straight session.
- The risk-off mood benefitted the USD’s safe-haven status against the GBP.
- Falling US bond yields capped the USD upside and helped limit deeper losses.
The GBP/USD pair held on to its weaker tone through the early North-American session on Friday, albeit has managed to rebound around 30-35 pips from weekly lows.
The pair added to the overnight losses and remained under some selling pressure for the second consecutive session on Friday amid the prevalent risk-off mood, which benefitted the US dollar’s perceive safe-haven status against its British counterpart.
Softer USD extended some support
The US airstrikes on Baghdad airport killed a top Iranian general, stoking fears of a further escalation of geopolitical tensions in the Middle East. This triggered a fresh wave of the global risk-aversion trade and was evident from a selloff across equity markets.
The sterling was further weighed down by Friday’s disappointing UK macro data. In fact, the UK Construction PMI fell to 44.4 in December, down sharply from 45.3 recorded in November and missing the consensus estimates pointing to a reading of 45.9.
This comes on the back of concerns that the UK won’t be able to reach a trade agreement and crash out of the European Union at the end of this year. The pair dropped to fresh weekly lows, albeit managed to find some support just ahead of mid-1.3000s.
A sharp intraday slide in the US Treasury bond yields kept a lid on the attempted USD positive move and turned out to be one of the key factors that helped limit deeper losses. Market participants now look forward to the US economic docket – highlighting the release of ISM Manufacturing PMI.
Later during the US session, the Fed will release the minutes of its December monetary policy meeting and influence the USD price dynamics, which might further contribute towards producing some short-term trading opportunities on the last day of the week.
Technical levels to watch
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