GBP/USD strengthens to over one-week tops, bulls eyeing a move beyond 1.3800
- GBP/USD regained positive traction on Monday amid a broad-based USD weakness.
- Rising COVID-19 cases, sliding US bond yields acted as a headwind for the greenback.
- Brexit woes might hold bulls from placing aggressive bets and cap any further gains.
The GBP/USD pair held steady near one-week tops through the mid-European session, with bulls now awaiting a sustained move beyond the 1.3800 round-figure mark.
Following Friday's modest pullback, the GBP/USD pair caught some fresh bids on the first day of a new trading week and built on its recent strong bounce from the lowest level since early February. The uptick was sponsored by a broad-based US dollar weakness and seemed rather unaffected by Brexit woes/COVID-19 jitters.
The ongoing spread of COVID-19 across the US fueled fears about renewed restrictions on business and social life and acted as a headwind for the USD. Apart from this, a sharp intraday fall in the US Treasury bond yields – triggered by the risk-off impulse in the markets – was seen as another factor undermining the greenback.
The bid tone surrounding the GBP/USD pair could further be attributed to some cross-driven strength stemming from an intraday decline in the EUR/GBP cross. The combination of supporting factors, to a larger extent, helped offset growing worries about the EU-UK impasse over the Northern Ireland Protocol of the Brexit deal.
Meanwhile, the fundamental backdrop hasn't been supportive for bullish traders. Moreover, there isn't any major market-moving economic data due for release on Monday, either from the UK or the US. This further makes it prudent to wait for some strong follow-through buying before confirming that the GBP/USD pair has bottomed out already.
Technical levels to watch