GBP/USD climbs to fresh session tops, around 1.3800 mark amid weaker USD

The USD witnessed some fresh selling during the early European session and pushed the GBP/USD pair to the 1.3800 neighbourhood in the last hour.

Following the previous day's pullback from one-week tops, the pair regained positive traction on Thursday and might now be looking to build on this week's bounce from 100-day SMA support. This marked the fourth consecutive day of a positive move and was exclusively sponsored by sustained selling around the US dollar.

In fact, the USD Index dropped to near one-month lows amid a fresh leg down in the US Treasury bond yields. Tuesday's US CPI report reinforced the Fed's view that higher inflation will be transitory and dampened prospects for an early lift-off. This comes on the back of repeated assurances from Fed officials that rates will stay low.

The Fed Chair Jerome Powell reiterated on Wednesday that the US central bank will reduce its monthly bond purchased before it commits to an interest rate increase, which is unlikely before the end of 2022. This, in turn, dragged the yield on the benchmark 10-year US government bond further away from a 14-month peak of 1.776% touched in March.

That said, concerns about a link between the AstraZeneca COVID-19 vaccine and a rare blood clot might hold traders from placing aggressive bullish bets around the British pound. Given that the UK vaccination program relies heavily on the AstraZeneca shot, a temporary ban for the below 30 age group could delay the government's plan to reopen the economy.

This makes it prudent to wait for a sustained strength beyond the 1.3800 round-figure mark before positioning for any further appreciating move for the GBP/USD pair. Investors might also prefer to move on the sidelines and wait for a fresh catalyst from Thursday's release of the BoE's Credit Conditions Survey/important US macro data.

The US economic docket highlights the releases of monthly Retail Sales figures, Philly Fed Manufacturing Index and the usual Initial Weekly Jobless Claims. This, along with the US bond yields will influence the USD price dynamics and allow traders to grab some short-term opportunities around the GBP/USD pair.

Technical levels to watch