- A goodish pickup in the USD demand prompted fresh selling around GBP/USD on Thursday.
- Fed taper bets pushed the US bond yields higher and continued underpinning the greenback.
- The USD stood tall and seemed rather unaffected after softer than expected US macro data.
The GBP/USD pair extended its steady intraday descent through the early North American session and dropped to fresh daily lows, around the 1.3720 region in the last hour.
The pair struggled to capitalize on this week's strong recovery gains recorded over the past three trading sessions and witnessed some selling on Thursday. A goodish pickup in the US dollar demand was seen as a key factor that exerted some pressure on the GBP/USD pair, which has now reversed the previous day's positive move to one-week tops.
Investors seem convinced that the Fed might still begin rolling back its pandemic-era stimulus amid easing worries about the economic fallout from the Delta variant of the coronavirus. This was evident from the ongoing rally in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond shot to almost two-week highs.
The market concerns eased after the US Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech COVID-19 vaccine, raising hopes that inoculations in the US could accelerate. Adding to this, the top US infectious disease expert said that COVID-19 could be under control by early next year and further boosted investors' confidence.
The USD maintained its bid tone and seemed unaffected by softer US macro data, showing that the second-quarter economic growth stood at 6.6% annualized. This was slightly lower than 6.7% anticipated, though was better than the 6.5% reported in the Advance report. Separately, the US Weekly Jobless Claims rose to 353K last week from 349K previous.
On the other hand, worries about the recent spike in coronavirus cases in the UK acted as a headwind for the British pound, which contributed to the offered tone surrounding the GBP/USD pair. However, the downside is likely to remain cushioned, at least for now, ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.
Even from a technical perspective, the GBP/USD pair has been showing some resilience below the 1.3700 mark. This further makes it prudent to wait for some strong follow-through selling below the mentioned handle before confirming that the recent bounce from the 1.3600 neighbourhood or one-month lows has run out of steam.