GBP/USD eases from 3-week tops, still well bid around 1.2380 region
- GBP/USD gains some follow-through traction on Monday amid sustained USD selling.
- Rising optimism about the global economic recovery undermined the safe-haven USD.
- The GBP bulls struggled to find acceptance above 1.2400 mark, warranting some caution.
The GBP/USD pair trimmed a part of its daily gains and has now retreated around 40-50 pips from three-week tops set earlier this Monday.
The pair added to last week's positive move and gained some follow-through traction on the first day of a new trading week amid the prevalent selling bias surrounding the US dollar. The recent optimism about a sharp V-shaped recovery for the global economy prompted investors to continue dumping the safe-haven USD.
Investors further cheered US President Donald Trump's measured response to China's move to tighten control over the city of Hong Kong. As expected, Trump began the process of ending Hong Kong's special status but did not withdraw from the phase-one trade deal with China signed in January, as the market had feared.
Meanwhile, the latest Chinese PMI prints for May added to signs of a pickup in the dragon nation's manufacturing sector activity, which further boosted investors' confidence and undermined the USD demand. The greenback was also pressured by the widespread protests over the death of George Floyd at the hands of Minneapolis police.
The pair shot to the highest level since May 11 and had a rather muted reaction to the UK Manufacturing PMI, which was revised higher to 40.7 for the reported month from 40.6 estimated earlier. Bulls, however, struggled to find acceptance above the 1.2400 mark, warranting some caution before positioning for any further gains.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ISM Manufacturing PMI. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.
Technical levels to watch