The GBP/USD pair has managed to erase a large portion of its daily losses after having dropped to its weakest level since March 2020 at 1.1447 during the Asian trading hours on Monday.
As investors wait for the Chairman of the 1922 Committee to announce the new British Prime Minister, the pair stays below 1.1500. The near-term technical outlook points to oversold conditions but sellers are likely to dominate the action unless 1.1550 turns into support.
The negative shift witnessed in risk sentiment amid the deepening energy crisis in the euro area provided a boost to the greenback and weighed on GBP/USD.
The US Dollar Index, which tracks the dollar’s performance against a basket of six major currencies, reached its highest level in two decades at 110.27 earlier in the day before retreating below 110.00.
Stock and bond markets in the US will be closed due to the Labor Day holiday on Monday and the trading action could remain subdued in the second half of the day.
Meanwhile, the UK’s FTSE 100 Index is down more than 1% on the day, not allowing the pair to gather recovery momentum.
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