GBP/USD retreats from daily top, still well bid amid broad-based USD weakness

• GBP/USD gains some positive traction on Monday, though lacks follow-through.
• A combination of factors exerts some pressure on the USD and offers support.
• Bulls seem rather unimpressed by the UK government’s U-turn on fiscal plans.

The GBP/USD pair catches fresh bids on the first day of a new trading week, though struggles to find acceptance or capitalize on the move beyond the 1.1300 mark. Spot prices, hold steady above mid-1.1200s through the first half of the European session amid a modest US dollar weakness.

A strong recovery in the global risk sentiment, along with a softer tone surrounding the US Treasury bond yields, turn out to be a key factor exerting downward pressure on the safe-haven buck. That said, a combination of factors helps limit deeper losses for the greenback and keeps a lid on the GBP/USD pair, at least for the time being.

Investors remain concerned about the potential economic headwinds stemming from rapidly rising borrowing costs and geopolitical risk. Moreover, China's zero-COVID policy has been fueling recession fears. This, along with hawkish Fed expectations, should continue to act as a tailwind for the US bond yields and offer some support to the USD.

The GBP/USD pair, meanwhile, reacted little to the fact that the new UK Finance Minister Jeremy Hunt reversed the controversial economic package announced in the mini-budget on September 23. This, in turn, suggests that the path of least resistance for spot prices is to the downside and warrants some caution for aggressive bullish traders.

There isn't any major market-moving macro data due for release from the UK, while the US economic docket features the Empire State Manufacturing Index later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, might influence the USD and provide some impetus to the GBP/USD pair.

Technical levels to watch