The USD shopping for hobby picked up tempo throughout the early European session and dragged the GBP/USD pair to one-and-half-week lows, round the 1.3865 place in the ultimate hour.
The pair prolonged the preceding day’s rejection slide from the key 1.4000 psychological mark and witnessed some follow-through promoting via the first 1/2 of the trading motion on Tuesday. The downfall was once completely backed with the aid of a broad-based US dollar energy amid growing bets for a especially quicker US financial recuperation from the pandemic.
The mind-blowing tempo of COVID-19 vaccinations and the growth on a big US fiscal spending graph has been fueling the reflation trade. The narrative of robust sequential restoration used to be strengthened with the aid of the US ISM Manufacturing PMI, which jumped to a three-year excessive degree of 60.8 in February and used to be considered as a key aspect that persisted underpinning the greenback.
Apart from this, a softer threat tone similarly benefitted the USD’s relative safe-haven popularity and in addition contributed to the GBP/USD pair’s ongoing slide to the lowest stage due to the fact that February 18. The risk-off temper was once bolstered by way of a modest pullback in the US Treasury bond yields, even though did little to dent the bullish sentiment surrounding the buck.
Meanwhile, the GBP/USD pair’s incapability to appeal to any significant shopping for hobby suggests that most of the high-quality information is thoroughly priced in the market. Adding to this, sustained weak spot beneath the 1.3900 mark would possibly have already shifted the bias in favour of bearish merchants and helps potentialities for an extension of the corrective decline.
Hence, some follow-through weakness, closer to the subsequent applicable help close to the 1.3815 region, now appears a awesome possibility. There is not any principal market-moving financial information due for launch on Tuesday, both from the UK or the US, leaving the GBP/USD pair at the mercy of the USD fee dynamics and the broader market threat sentiment.