GBP/USD consolidates near multi-week tops, around mid-1.3900s

• GBP/SUD was seen consolidating its recent strong gains to the highest level since June 24.
• A modest USD strength held bulls from placing fresh bets and capped the upside for the pair.
• The downside seems limited as traders now eye US Core PCE Price Index for a fresh impetus.

The GBP/USD pair seesawed between tepid gains/minor losses through the early European session and was last seen trading in the neutral territory, just above mid-1.3900s.

The pair was seen oscillating in a narrow trading band through the first half of the trading action on Friday and consolidated its recent strong gains to the highest level since June 24. It is worth reporting that the GBP/USD pair has rallied over 400 pips from multi-month lows touched last week amid optimism over the declining trend in new COVID-19 cases in the UK.

However, a modest US dollar strength held traders from placing fresh bullish bets and kept a lid on any further gains, at least for the time being. As investors looked past Thursday's softer US GDP print, worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus benefitted the greenback's relative safe-haven status.

That said, Fed Chair Jerome Powell's dovish remarks on Wednesday acted as a headwind for the USD. During the post-meeting press conference, Powell emphasised that they were some ways away from substantial progress on jobs. Powell was also cautious about tapering and said that it will take a few more meetings before the Fed starts slowing its massive monetary support.

Apart from this, a fresh leg down in the US Treasury bond yields – triggered by the risk-off impulse in the market – might further cap the upside for the greenback. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the GBP/USD pair has topped out in the near term and positioning for any meaningful corrective slide.

There isn't any major market-moving economic data due for release from the UK on Friday, leaving the GBP/USD pair at the mercy of the USD price dynamics. Later during the early North American session, traders will take cues from the release of the US Core PCE Price Index. The Fed's preferred inflation gauge might influence the USD price dynamics and provide some impetus.

Technical levels to watch