The GBP/USD pair rallied around 65-70 pips from intraday lows and jumped back above the 1.3900 mark during the first half of the European session.
Following an early slide to the 1.3845 region, the pair attracted some dip-buying on Wednesday and turned positive for the second consecutive session. The underlying bullish sentiment – as depicted by a fresh leg up in the equity markets – weighed on the safe-haven US dollar. This, in turn, was seen as a key factor that assisted the GBP/USD pair to regain positive traction.
That said, a combination of factors might help limit any meaningful USD slide and keep a lid on any strong gains for the GBP/USD pair. Investors remain optimistic about the prospects for a strong US economic recovery amid the impressive pace of COVID-19 vaccinations and the passage of a much-awaited $1.9 trillion pandemic relief package proposed by President Joe Biden.