GBP/USD rebounds swiftly from one-week lows, climbs back closer to mid-1.3800s
- GBP/USD witnessed some intraday selling on Friday and dropped to fresh weekly lows.
- COVID-19 jitters acted as a headwind for the sterling and exerted downward pressure.
- Bulls showed some resilience below the 1.3800 mark amid a subdued USD demand.
- Rebounding US bond yields might underpin the USD and cap gains ahead of US data.
The GBP/USD pair slipped below the 1.3800 mark, or fresh weekly lows during the early European session, albeit quickly recovered back closer to the top end of its daily trading range.
The pair witnessed some intraday selling on the last trading day of the week and extended this week’s retracement slide from levels beyond the 1.3900 mark. The overnight hawkish comments by the Bank of England policymaker Michael Saunders were overshadowed by concerns about a fresh COVID-19 outbreak in the UK. This, in turn, acted as a headwind for the British pound and exerted pressure on the GBP/USD pair.
On the other hand, a strong pickup in the US Treasury bond yields extended some support to the US dollar. Apart from this, expectations that the Fed will tighten its policy sooner than anticipated further underpinned the greenback. The was seen as another factor that contributed to the intraday decline. The GBP/USD pair, however, showed some resilience below the 1.3800 mark and quickly recovered around 40 pips in the last hour.
In the absence of any major market-moving economic releases from the UK, any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. The US economic docket highlights the release of monthly Retail Sales figures. This, along with the US bond yields and the broader market risk sentiment, might influence the USD price dynamics and provide a fresh impetus to the GBP/USD pair.
Technical levels to watch