- GBP/USD treads water in the Asian session.
- US dollar remains steady and exerts pressure on the pair.
- Brexit concerns, Delta strain added to the British pound struggle.
The appreciative move in the US dollar keeps GBP/USD off guard on Thursday’s Asian trading hours. The pair remains reluctant to shed the previous day's weakness and continues to make minute moves with no meaningful tractions.
At the time of writing, GBP/USD trades at 1.4114, down 0.03% for the day.
The US Dollar Index (DXY) gathers momentum in the early Asian session, as investors await the highly anticipated US Consumer Price Index (CPI) data. The US Treasury yields ease to a fresh three months low of 1.48%.
Investors remain cautious about the Fed tapering measures if the data came at the higher end. The higher interest rates could trigger a sell-off in Treasuries, and thus higher yields, eventually higher USD valuations.
On the other hand, the combination of factors weighs on the sterling performance. The growing tensions between UK and EU, as the two sides failed to reach an agreement on implementing the Northern Ireland Protocol, impacting the sterling negatively. The British Prime Minister Boris Johnson is considering all options amid an emerging trade war after Brussels threatens to impose sanctions over British exports to NI.
Meanwhile, US President Joe Biden, who is in the UK to attend the G-7 meeting, warned the UK and directed to resolve the NI issue with the EU.
In addition to that, the rising corona cases amid the newly found “Delta strain” put the UK government's full economy opening plan in dismay.
As for now, investors are keeping a close watch on the US Core Purchase Index (CPI) report and Initial Jobless Claim for June 4 to gain some fresh trading impetus.