- GBP/USD struggled to maintain early gains
- Covid woes kept bulls on the sidelines.
- A mild rise in USD demand added pressure on the major.
GBP/USD pullback 50 pips from the daily high and trades at the lower end of the dailly traded range.
The British pound was weighed down by Friday’s weaker than forecast Retail Sales figures and PMI prints raising concerns over the health of the UK economy.
Fears that the new UK covid variant was not only highly infectious but perhaps more deadly kept the pressure on the Pound. Raising covid fears drove demand for the safe haven US dollar.
Expectations that a huge US fiscal stimulus will boost the global economic recovery could cap US Dollar gains. Therefore it would be prudent to wait for some strong follow-through selling, possibly below Friday’s swing lows 1.3635 region selling the GBP.
There is no major market moving data from the UK or US. Covid developments will play a dominant role in driving market risk sentiment and drive the USD price dynamics. A speech by the BoE Governor Andrew Bailey could also be in focus.
The FOMC monetary policy decision on Wednesday will be a key focus. The US Q4 GDP report on Thursday will also be in focus.