GBP/USD trades with modest intraday gains, remains below 1.3800 mark

• A subdued USD price action assisted GBP/USD to regain positive traction on Thursday.
• A combination of factors held bulls from placing aggressive bets and capped the upside.
• The focus remains on Friday’s release of the closely-watched US monthly jobs report.

The GBP/USD pair edged higher through the early European session and climbed to fresh daily tops, around the 1.3785 region in the last hour, albeit lacked follow-through.

Following the previous day's pullback from the vicinity of the 1.3800 mark, the GBP/USD pair regained positive traction for the second consecutive session on Thursday. The uptick was exclusively sponsored by a subdued US dollar price action, though lacked strong bullish conviction.

The USD languished near multi-week lows amid uncertainty about the likely timing of the Fed's tapering plan and doubts about the US labor market recovery. The ADP report released on Wednesday showed that the US private-sector employers hired far fewer workers than expected in August.

This further seems to have dashed hopes for an early lift-off, which was evident from a modest pullback in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond has now retreated back to the 1.30% threshold and acted as a headwind for the USD.

Meanwhile, the UK and EU remain at odds on the way forward for the Northern Ireland Protocol. This, along with the recent spike in new COVID-19 cases in the UK, held traders from placing any aggressive bullish bets around the British pound and capped the upside for the GBP/USD pair.

Even from a technical perspective, bulls, so far, have been struggling to find acceptance above the 1.3800 mark and break through a technically significant 200-day SMA. This warrants some caution before positioning for any meaningful gains ahead of Friday's release of the US jobs report.

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. Traders now look forward to the US Weekly Jobless Claims data for some impetus later during the early North American session.

Technical levels to watch