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3 Aug 2021

GBP/USD surrenders intraday gains, slides back below 1.3900 mark

  • GBP/USD struggled to capitalize on its intraday positive move amid a goodish USD rebound.
  • A sharp turnaround in the equity markets drove some haven flows towards the greenback.
  • The downside seems limited, warranting some caution before placing aggressive bearish bets.

The GBP/USD pair retreated nearly 50 pips from daily swing lows and has slipped below the 1.3900 mark, back closer to the lower end of its daily trading range during the early North American session.

A turnaround in the global equity markets drove some haven flows and assisted the US dollar to reverse its early lost ground back closer to one-month lows. This, in turn, was seen as a key factor that failed to assist the GBP/USD pair to capitalize on its intraday positive move, rather prompted some selling around the 1.3935-40 region.

That said, a fresh leg down in the US Treasury bond yields – amid expectations that the Fed will retain its ultra-lose policy stance for a longer period – might cap gains for the greenback. Apart from this, a combination of factors acted as a tailwind for the British pound and might help limit any meaningful slide for the GBP/USD pair.

Investors remained optimistic over the declining trend of new COVID-19 cases in the UK. This, along with a more robust UK economic recovery, has been fueling speculations that the Bank of England (BoE) could be among the first major central banks to scale down its stimulus support. This, in turn, should continue to underpin the sterling.

Nevertheless, the GBP/USD pair, so far, has managed to hold with modest intraday gains. In the absence of any major market-moving economic releases, any subsequent downfall might still be seen as a buying opportunity. This should act as a key pivotal point for intraday traders amid absent relevant market-moving economic releases.

Technical levels to watch

 

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