GBP/USD drops to fresh session lows, closer to 1.3700 mark
- GBP/USD witnessed some heavy selling on Friday amid a strong pickup in the USD demand.
- Thursday’s upbeat US macro data, rebounding US bond yields underpinned the greenback.
- Cross-driven weakness stemming from a spike in EUR/GBP contributed to the selling bias.
The GBP/USD pair added to its intraday losses and dropped to fresh daily lows, around the 1.3715 region during the early European session.
Having repeatedly failed to find acceptance above the 1.3800 mark, the pair came under some renewed selling pressure on Friday and snapped four consecutive days of the winning streak. The US dollar built on the previous day's bounce from multi-week lows amid a strong pickup in the US Treasury bond yields. This, in turn, was seen as a key factor exerting downward pressure on the GBP/USD pair.
The USD stalled its recent downward trajectory and found some support from Thursday's upbeat US macro releases, which indicated that the recovery is well on track. The Commerce Department reported that Retail Sales surged 9.8% in March – marking the best figure since May 2020. Adding to this, regional manufacturing indices and Weekly Jobless Claims also came in better than market expectations.
On the other hand, the British pound was weighed down by concerns about a link between the AstraZeneca COVID-19 vaccine and a rare blood clot might. 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 was seen as another factor that contributed to the GBP/USD pair decline.
Apart from this, the latest leg of a sudden fall over the past hour or so could be attributed to some cross-driven weakness stemming from a fresh leg up in the EUR/GBP cross. The GBP/USD pair has now retreated over 90 pips from weekly tops touched on Wednesday and a subsequent slide below the 1.3700 round-figure mark will set the stage for further weakness amid absent market-moving UK economic data.
Meanwhile, the US economic docket features the release of housing market data – Housing Starts and Building Permits – and prelim Michigan Consumer Sentiment Index. This, along with the US bond yields, will influence the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair on the last day of the week.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
