- GBP/USD caught some fresh bids on Wednesday amid renewed USD selling bias.
- Retreating US bond yields undermined the USD despite hawkish FOMC minutes.
- The upbeat UK economic outlook remained supportive; Brexit jitters capped gains.
The GBP/USD pair broke out of its intraday consolidative trading range and jumped to fresh daily tops, around the 1.4140 region during the early part of the European session.
Having defended the 1.4100 round-figure mark, the pair attracted some dip-buying on Wednesday and recovered a part of the previous day’s hawkish FOMC minutes-inspired losses. The uptick allowed the GBP/USD pair to stall its corrective pullback from near three-month tops touched earlier this week and was sponsored by renewed US dollar selling bias.
Despite hints that the Fed has begun debating on QE tapering, the USD struggled to capitalize on its attempted recovery from multi-month lows amid a modest pullback in the US Treasury bond yields. Even a softer tone around the equity markets failed to revive demand for the safe-haven greenback or hinder the GBP/USD pair’s intraday positive move.
On the other hand, the British pound was supported by the optimistic UK economic outlook, bolstered by the gradual easing of lockdown measures. In fact, the UK Prime Minister Boris Johnson said on Tuesday that there is nothing conclusive yet to indicate that the Indian variant would force Britain to deviate from its plan to end restrictions fully on June 21.
That said, uncertainty over the post-Brexit agreement on Northern Ireland held bulls from placing aggressive bets and kept a lid on any further gains for the GBP/USD pair. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move amid absent relevant market-moving macro data from the UK.
Later during the early North American session, traders might take cues from the US economic docket – featuring the release of Philly Fed Manufacturing Index and Initial Weekly Jobless Claims. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and produce some trading opportunities around the GBP/USD pair.
Technical levels to watch
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