GBP/USD eases from daily high, struggles to find acceptance above 1.3300 mark

• GBP/USD gained some positive traction on Thursday, albeit lacked any follow-through.
• Brexit-related uncertainties acted as a headwind for the British pound and capped gains.
• The fundamental backdrop favours USD bulls and support prospects for a further decline.

The GBP/USD pair retreated a few pips from the Asian session high and was last seen trading just below the 1.3300 mark, up around 0.10% for the day.

The pair gained some positive traction during the early part of the trading action on Thursday and for now, seems to have snapped three consecutive days of the losing streak. An uptick in Asian equity markets undermined the safe-haven US dollar and extended some support to the GBP/USD pair, though any meaningful recovery still seems elusive.

The UK-EU impasse over the Northern Ireland Protocol and the worsening row over the post-Brexit fishing rights between France and Britain might continued acting as a headwind for the sterling. Apart from this, the prospects for a more aggressive policy tightening by the Fed favours the USD bulls and collaboarte to cap gains for the GBP/USD pair.

In fact, the money markets started pricing in the possibility of at least a 50 bps rate hike by the end of 2022 in reaction to Fed Chair Jerome Powell's hawkish comments. Testifying before the congress for the second day on Wednesday, Powell reiterated that the US central bank is likely to speed up the tapering of its asset purchases.

Meanwhile, concerns about the economic fallout from the detection of a new and possibly vaccine-resistant coronavirus variant should keep a lid on any optimistic move in the markets. The market concerns exacerbated further after US officials said that the more transmissible Omicron vairant had been found in the country.

The fundamental backdrop supports prospects for an extension of the recent downward trajectory, though the lack of any strong follow-through selling warrants some caution. There isn't any major market moving economic data due for release from the UK on Thursday, 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 Weekly Initial Jobless Claims and speeches by a slew of influential FOMC members. This, along with the broader market risk sentiment, will drive the USD demand and provide some short-term trading impetus to the GBP/USD pair.

Technical levels to watch