GBP/USD defends 1.4100 amid unlocking delay, USD strength
- GBP/USD trades with a cautious tone in the Asian session.
- Uptick in US Treasury yields lifts the US dollar.
- GBP is under stress amid unlocking delay and Brexit concern
The rebound in the US dollar from the lower level keeps GBP/USD gains limited on the first trading day of the week. The pair subsides following a combination of factors in the absence of any major fundamental release.
At the time of writing, GBP/USD trades at 1.4114, up 0.05% for the day.
The US dollar trades near the five-week high at 90.55 following the gains in the US 10-year benchmark yields from the lower levels to trade at 1.46%. Investors digested the higher US inflation reading and cheered the robust economic data. The University of Michigan’s Consumer Sentiment came at 86.4, much above the market expectations at 84.
Meanwhile, the G-7 countries vowed to launch a ‘democratic’ alternative to China’s Belt and Road initiative to undermine the competition. Beijing came under severe criticism over the covid-19 origin and human rights violations. The sour market sentiment added to the attractiveness of the US dollar.
On the other hand, the sterling is struggling with the renewed pressure of the delayed economic opening plan. In the latest development, senior ministers in the UK have signed off a decision to delay the lifting of all covid-19 restrictions beyond June 21. This, in turn, weighs on the currency performance in the view that it can affect the pace of economic recovery.
In addition to that, Brexit remains a pain for Prime Minister Boris Jhonson. The spat between UK and EU over the Northern Ireland protocol attracted political attention from all over the world. After US President Joe Biden offered his negotiation proposal, the latest addition to the row is French President Emmanuel Macron. He commented that NI is not a part of the UK after the Prime Minister asked for his reactions on the issue.
French President in the G7 meeting further said that Franco-British ties can be reset as long as Britain honours the Brexit deal.
As for now, investors await the Bank of England Governor Andrew Bailey's speech to gauge the market sentiment.
GBP/USD additional level