GBP/USD stays directed below 1.3650 amid USD rebound
- GBP/USD pares some of its initial gains on Monday.
- The US Dollar Index rebounds toward 94.20 following a recent mild pullback.
- Mixed play amid hawkish BOE and Brexit woes tests the sterling against majors.
The GBP/USD pair edges higher as the fresh trading week begins. The pair touched the intraday high at 1.3655 and swiftly retreats toward the lower level. At the time of writing, GBP/USD is trading at 1.3643, up 0.21% for the day.
The US Dollar Index (USD), which tracks the performance of the greenback against its six major rivals, trades near 94.20 following higher US T-bonds yields. The US benchmark Treasury yields soar 1.61% with more than 1% gains.
The greenback lock in gains despite downbeat NFP data released on Friday. The US economy added just 194K jobs in September. Nevertheless, Fed’s seems unfazed by the numbers and looks affirmed to begin tapering as soon as November. In addition to that, China’s latest offer to tack back tariffs and sanctions in a virtual meet between the US Trade Representative Katherine Tai and China’s Vice Premier Liu he raised the temperature in the region resulting in capital flows toward the greenback on its safe-haven appeal.
On the other hand, the British pound continues to swing in between hawkish BOE and the uncertainties arising from the Brexit saga. The Bank of England (BOE) Governor Andrew Bailey warned of a potentially “very damaging “, period of inflation unless policymakers take any action whereas Monetary Policy Committee (MPC) member Michael Saunders also supported the hawkish view. Furthermore, Ireland’s foreign minister warned that the UK demand for the Northern Ireland Protocol could result in “ a breakdown in relations” with the European Union (EU).
Meantime, China bans the import of UK beef from cattle under 30-month of age as a case of ‘mad cow' disease detected on a farm in Britain.
As for now, traders keep their focus on the UK BRC Like-For-Like Retail Sales on the light economic calendar to gauge the market sentiment.
GBP/USD additional levels