GBP/USD struggles to find acceptance above 1.3600 mark

  • GBP/USD gained some traction on Thursday amid a subdued USD price action.
  • A combination of factors held bulls from placing aggressive bets and capped gains.

The GBP/USD pair quickly recovered around 25-30 pips from the early European session lows, albeit struggled to capitalize on the move beyond the 1.3600 round-figure mark.

The risk-on impulse in the markets held traders from placing fresh bullish bets around the safe-haven US dollar and acted as a tailwind for the GBP/USD pair. The British pound was further supported by signs of easing fuel crisis in the United Kingdom, though comments by the Bank of England chief economist, Huw Pill, capped gains.

Pill said that the current inflation strength looks to prove more lasting than anticipated originally and the BoE plans to unwind stock of asset purchases in the best way possible. He, however, expected interest rates to remain at relatively low levels for the coming years even as the impact of the COVID-19 pandemic recedes.

This comes amid renewed tensions between Britain and France over post-Brexit fishing rights, which collaborated to keep a lid on any meaningful upside for the GBP/USD pair. In the latest development, French Finance Minister Bruno Le Maire stated on Wednesday that France will define an action plan on UK and fishing on October 15.

On the other hand, firming expectations that the Fed will begin rolling back its massive pandemic-era stimulus as soon as November and raise interest rates in 2022 helped limit any deeper USD losses. This, in turn, warrants some caution before positioning for any further appreciating move amid absent market-moving economic data from the UK.

Later during the early North American session, traders might take cues from the release of the usual US Weekly Initial Jobless Claims data. This, along with the broader market risk sentiment and the US bond yields, might influence the USD price dynamics and provide some impetus to the GBP/USD pair ahead of Friday’s release of the US jobs report (NFP).

Technical levels to watch

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