GBP/USD edges higher to mid-1.3900s, lacks follow-through
- GBP/USD managed to regain some positive traction on the last trading day of the week.
- Retreating US bond yields kept the USD bulls on the defensive and extended some support.
- Concerns about a shortage in COVID-19 vaccines in the UK might cap gains for the major.
The USD witnessed some selling during the early European session and pushed the GBP/USD pair back above mid-1.3900s, or fresh daily tops in the last hour.
A modest pullback in the US Treasury bond yields from over one-year high of 1.754% touched in the previous session exerted some pressure on the US dollar. This, in turn, assisted the GBP/USD pair to stall the overnight rejection slide from the key 1.4000 psychological mark and regain traction on the last trading day of the week.
Meanwhile, the calmer tone in the fixed income market provided a modest lift to the global risk sentiment, which was seen as another factor that dented the greenback's relative safe-haven status. That said, the optimistic US economic outlook should help limit the USD pullback and cap any meaningful upside for the GBP/USD pair.
Apart from this, reports about the likely shortage of COVID-19 vaccines in the UK might further hold traders from placing aggressive bullish bets around the British pound. A significant reduction in vaccine supplies could derail the UK government's plan to exit the current lockdown and dampen prospects for a faster economic recovery.
This comes on the back of Thursday's rather dovish statement by the Bank of England, indicating that the outlook for the economy remained unusually uncertain. Moreover, repeated failures at higher levels further warrant caution before positioning for any further appreciating move amid absent relevant market moving economic releases.
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