The GBP/USD pair faded an early European bullish spike to the 1.3780 region and quickly retreated around 40 pips in the last hour. The pair was last seen hovering near the lower end of its intraday trading range, below mid-1.3700s.
The US dollar struggled to capitalize on the previous day’s bounce from over two-week lows, instead edged lower through the first half of the trading action on Thursday. This, in turn, was seen as a key factor that assisted the GBP/USD pair to gain some positive traction and move away from one-week lows touched in the previous day.
The underlying bullish sentiment in the financial markets undermined the safe-haven greenback, which was further weighed down by a modest downtick in the US Treasury bond yields. Apart from this, the uptick lacked any obvious fundamental catalyst and quickly ran out of steam amid some cross-driven weakness stemming from the EUR/GBP pair.
On the economic data front, the UK Construction PMI jumped to 61.7 in March from the 53.3 previous and surpassed even the most optimistic estimates. The data, however, did little to impress bullish traders or provide any meaningful lift to the GBP/USD pair amid concerns over the disruption to the UK’s vaccine rollout.
The UK’s medical regulator on Wednesday issued a temporary ban on the AstraZeneca vaccine for the below 30 age group. Adding to this, the trial of the said coronavirus vaccine on children has been paused. This fueled speculations about a delay in the government’s plan to reopen the economy, which now seemed to weigh on the sterling.
From a technical perspective, the emergence of some fresh selling at higher levels supports prospects for an extension of the GBP/USD pair’s sharp pullback from levels beyond the 1.3900 mark. Hence, a subsequent slide towards the 1.3700 mark, en-route multi-week lows near the 1.3670 region, now looks a distinct possibility.