- GBP/USD consolidates gains near 1.4160 in the Asian session.
- Softer US dollar leads constructive bids for the pair.
- Risk-on sentiment weighs on the demand for the USD.
The depreciative move in the US dollar keeps GBP/USD buoyed on Tuesday. The pair looks exhausted after testing the YTD high at 1.4233 on Friday and is consolidating in the vicinity of the 1.4150 area.
At the time of writing, the pair is trading at 1.4164, up 0.03% for the day.
The solid economic data in the UK strengthens the outlook of the economy coupled with the faster vaccination program. The economy is gearing up for the final stage of re-opening despite the threat of the Indian covid-19. The latest report from Public Health England (PHE) confirmed that both Pfizer-BioNtech and AstraZeneca are effective against the variant. The optimism aided support to the sterling and pushed higher against the greenback.
In addition to that, the Bank of England (BOE) remained confident that the economy would grow by 7.25% in 2021. The Confederation of British Industry called for a new UK economic strategy and advocated refurbishment of the regulation and tax rules to help employers recover from the double whammy of Brexit and covid-19.
Meanwhile, comments from BoE Deputy Governor Jon Cunliffe on delayed rate hike signals failed to trigger any optimistic market reaction. Additionally, Brexit chaos remains a pain area of the cable. In the latest developments, France has warned the UK not to distort special post-Brexit trading rules for Northern Ireland.
On the other hand, the US Dollar Index (DXY) is hovering at the multi-month lows near 89.25, down 0.20% on the day. The US Treasury yields remained in a lower range after the Fed reiterated its dovish stance on the monetary policy.
It is worth noting that the S&P 500 Futures are trading at 4,201 with 0.17% gains. The improved risk appetite also weighs upon the demand for the US dollar. Thus helping the pair to lock in the gains.
As for now, traders await the release of the US New Home sales data and testimony from Fed Quarles to gain some fresh trading impetus.
GBP/USD Additional Levels
Share
