GBP/USD holds above 1.3700 mark, lacks follow-through ahead of Powell
|- GBP/USD attracted some dip-buying on Friday and recovered a part of the overnight losses.
- The risk-on mood undermined the safe-haven USD and provided a modest lift to the major.
- The upside remains limited ahead of Fed Chair Powell’s speech at Jackson Hole Symposium.
The GBP/USD pair held on to its modest intraday gains, around the 1.3715-20 region through the mid-European session, albeit lacked any follow-through buying.
The pair attracted some dip-buying on the last day of the week and rallied nearly 40 pips from four-day lows, around the 1.3680 region amid a modest US dollar weakness. The underlying bullish sentiment undermined demand for the safe-haven greenback and assisted the GBP/USD pair to recover a part of the overnight retracement slide from over one-week lows.
However, the increasing likelihood that the Fed could start reducing the pace of its massive asset purchases later this year acted as a tailwind for the USD. The market speculations were reaffirmed by Atlanta Fed President Raphael Bostic's comments this Friday, saying that the inflation episode is likely to go beyond 2022 and would want to do taper quickly.
This, along with the overnight hawkish remarks by St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan, might have convinced investors about the Fed's tapering plan. That said, the USD bulls seemed reluctant, rather preferred to wait on the sidelines ahead of the Fed Chair Jerome Powell's highly-anticipated speech at the Jackson Hole Symposium.
Market participants will look for fresh clues about the likely timing of the Fed's next move, which will influence the USD price dynamics and provide a fresh directional impetus to the GBP/USD pair. In the meantime, traders might take cues from Friday's release of the Fed's preferred inflation gauge, the Core PCE Price Index, for some short-term opportunities.
Technical levels to watch
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