- GBP/USD extended its sideways consolidative price action through the early European session.
- Upbeat UK Retail Sales, mixed UK PMI prints did little to impress bulls or provide any impetus.
- Retreating US bond yields undermined the USD and helped limit the downside for the major.
The GBP/USD pair remained confined in a range below the 1.4200 mark through the early European session and moved little post-UK PMIs.
The pair struggled to capitalize on the previous day’s strong positive move from the 1.4100 mark and witnessed a subdued/range-bound price moves during the first half of the trading action on Friday. Bulls seemed rather unimpressed by upbeat UK Retail Sales figures for April, while mixed PMI prints for May also did little to provide any meaningful impetus to the GBP/USD pair.
The incoming stronger economic data continues to add credence to the upbeat UK economic outlook amid the gradual easing of lockdown measures. That said, the muted market reaction suggests that a lot of positive is already priced in. This, along with uncertainty over the post-Brexit agreement on Northern Ireland, kept a lid on any meaningful upside for the GBP/USD pair, at least for now.
Meanwhile, the downside remains cushioned in the wake of the prevalent US dollar selling bias. Although the latest FOMC minutes indicated that policymakers have begun discussion on QE tapering, investors seem convinced that the Fed will retain its ultra-lose policy stance for a longer period. This acted as a headwind for the USD, which remained depressed near multi-month lows.
Apart from this, the ongoing decline in the US Treasury bond yields and the underlying bullish sentiment in the financial markets further undermined the safe-haven USD. This, in turn, extended some support to the GBP/USD pair. Market participants now look forward to the release of flash US PMI prints for a fresh impetus later during the early North American session.
Technical levels to watch
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