- GBP/USD reversed an intraday dip to the 1.3715 region and refreshed daily tops in the last hour.
- The USD struggled to preserve its intraday gains despite a strong rebound in the US bond yields.
- The risk-on mood further undermined the safe-haven USD and provided a goodish lift to the pair.
The GBP/USD pair rallied over 70 pips from the early European session through and jumped to fresh daily tops, around the 1.3785-90 region in the last hour.
The pair attracted some dip-buying on the last trading day of the week and quickly recovered its early lost ground to the 1.3715 region. The US dollar struggled to preserve its modest intraday gains, instead witnessed a modest pullback from higher levels. This, in turn, was seen as a key factor that assisted the GBP/USD pair to regain traction.
Despite the incoming strong US economic data, investors now seem convinced that the Fed will keep interest rates near zero levels for a longer period. Fading expectations for an earlier Fed lift-off capped any meaningful upside for the greenback, which, so far, has failed to find any support from a strong pickup in the US Treasury bond yields.
Apart from this, the underlying bullish sentiment in the financial markets – as depicted by a relentless rally in equity markets – further undermined the safe-haven USD. The GBP/USD pair has now moved back closer to the 1.3800 mark, though worries about the AstraZeneca coronavirus vaccine might keep a lid on any meaningful upside.
Market participants now look forward to the US economic docket, featuring the releases of Housing Starts, Building Permits and prelim Michigan Consumer Sentiment Index. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and allow traders to grab some short-term opportunities around the GBP/USD pair.
Technical levels to watch