GBP/USD slides to session lows, around 1.3820 area amid renewed USD strength
- GBP/USD met with some fresh supply at higher levels amid renewed USD buying interest.
- Rallying US bond yields acted as a tailwind for the USD and exerted pressure on the major.
- Investors now eye a speech by BoE’s Saunders for some meaningful trading opportunities.
The GBP/USD pair retreated nearly 35 pips from daily tops and dropped to the 1.3820 area heading into the European session.
The pair struggled to capitalize on its modest intraday gains, instead met with some near the 1.3855 region and turned lower for the second consecutive session on Tuesday. The downtick was exclusively sponsored by the emergence of some US dollar buying, supported by a strong follow-through uptick in the US Treasury bond yields.
As investors digested Friday's disappointing headline NFP print, hopes for an imminent Fed taper announcement pushed the yield on the benchmark 10-year US government bond back closer to the 1.35% threshold. Market participants now expect the US central bank to announce the timeline for tapering at the November FOMC meeting.
On the other hand, the UK-EU stand-off on the way forward for the Northern Ireland Protocol acted as a headwind for the British pound. This was seen as another factor that exerted some pressure on the GBP/USD pair amid worries about the fast-spreading Delta variant. That said, the risk-on mood should help limit any deeper losses.
The GBP/USD pair, so far, has managed to hold above the very important 200-day SMA as traders now look forward to a scheduled speech by the Bank of England MPC member Michael Saunders for a fresh impetus. A sustained break below will set the stage for an extension of the post-NFP pullback from the vicinity of the 1.3900 mark.
There isn't any major market-moving economic data due for release on Tuesday, either from the UK or the US. Hence, the US bond yields will continue to play a key role in influencing the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair.
Technical levels to watch