GBP/USD struggles to capitalize on intraday bounce, remains below 1.3900
- A modest USD pullback assisted GBP/USD to attract some buying mid-1.3800s on Monday.
- Rising bets for an earlier Fed taper, COVID-19 jitters underpinned the USD and capped gains.
The GBP/USD pair struggled to capitalize on its goodish intraday bounce from mid-1.3800s, or one-and-half-week lows and quickly retreated few pips from daily tops. The pair was last seen trading around the 1.3875-80 area, nearly unchanged for the day.
As investors looked past Friday's blockbuster NFP report, the US dollar witnessed some profit-taking on the first day of a new trading week amid a modest pullback in the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the GBP/USD pair. That said, a combination of factors acted as a tailwind for the USD and kept a lid on any meaningful upside for the major.
Investors now seem to have started pricing in the possibility that the Fed could begin tapering its asset purchases later this year and raise interest rates as soon as 2022. Apart from this, worries about the economic fallout from the fast-spreading Delta variant of the COVID-19 underpinned the safe-haven USD. This overshadowed the declining trend of new infections in the UK and held the GBP bulls from placing fresh bets.
The GBP/USD pair, so far, has remained capped below the 1.3900 mark and remains at the mercy of the USD price dynamics amid absent relevant market moving economic releases. Market participants now look forward to scheduled speeches by Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin. This, along with the US bond yields and the broader risk sentiment, might influence the USD and provide some impetus to the GBP/USD pair.
Technical levels to watch