- GBP/USD continued losing ground for the fourth consecutive session on Wednesday.
- Expectations for an early Fed taper underpinned the USD and exerted some pressure.
- Investors look forward to the US consumer inflation figures for a fresh trading impetus.
The GBP/USD pair witnessed some selling during the early European session and dropped to fresh two-week lows, around the 1.3815-10 region in the last hour.
The pair prolonged its recent slide from the vicinity of the 1.4000 psychological mark and remained under some selling pressure for the fourth consecutive session on Wednesday. The downward trajectory was exclusively sponsored by the ongoing strong US dollar positive move to the highest level since early April.
Friday's US NFP report marked another step towards the Fed's goal of substantial further progress in the labour market recovery. This forced investors to bring forward the likely timing for policy tightening and fueled speculations that the Fed will begin trimming its monthly bond purchases sooner rather than later.
The Fed officials have also started to guide the market towards early tapering and higher interest rates as soon as 2022. This was evident from a further move up in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot to the 1.37% neighbourhood and underpinned the USD.
Apart from this, worries that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery further acted as a tailwind for the safe-haven greenback. This, to a larger extent, offset optimism over the declining trend of COVID-19 cases in the UK and the BoE's hints about modest tightening.
Nevertheless, the USD price dynamics remains an exclusive driver of the GBP/USD pair's momentum ahead of the release of the US consumer inflation figures. The data will influence expectations about the next policy move by the Fed, which will drive the USD and provide some meaningful impetus to the GBP/USD pair.