GBP/USD bulls stepping in for a correction ahead of key events

• GBP/USD bulls have moved on in the bears early doors. 
• UK PMIs will be the only domestic event ahead of the end of week Fed showdown. 

GBP/USD is a touch higher in the open on Monday by some 0.1% after climbing from an opening low of 1.3606 before it reached a high of 1.3634 in recent trade.

On Friday, the cross edged down 15 pips to 1.3625 but touched a new one-month low against a robust dollar and the euro as global risk aversion propelled investors towards currencies considered safer early in the day.

Traders are worried that the Delta coronavirus variant could derail the global recovery, boosting demand for the safe-haven dollar where the US dollar smile theory continues to play out.

More here on that here: 

• US dollar embarking on a highly bullish weekly close

However, US dollar net longs slid in the latest week, according to Reuters calculations and Commodity Futures Trading Commission data released on Friday which could transport in some long covering in the spot market this week before Friday's showdown in the Jackson Hole. 

There are expectations that the Federal Reserve could taper asset purchases under its quantitative easing program by the end of the year and this Friday see the Federal Reserve's chairman, Jerome Powell addressing the symposium.

Meanwhile, data released on Friday showed British Retail Sales unexpectedly fell last month.

Retail sales volumes dropped by 2.5% in July from June, official data showed. A Reuters poll of economists had pointed to a 0.4% month-on-month increase in July sales.

For the week ahead, after Monday’s UK PMIs, there won’t be other market-moving releases in the UK until the growth/industrial production figures on 10 September.

Therefore, the focus is very much on the Jackson Hole and risks tiled to the upside for the greenback pertaining to central bank divergence and the delta variant.

Any stabilisation in the pound will likely rely on some tentative improvements in the global risk environment.

GBP/USD technical analysis 

With that being said, from a technical perspective, at least, there are meanwhile bullish corrective prospects on the daily chart: