The GBP/USD currency pair erased its previous advances. Indeed, this morning, Monday in Europe, it fell through the 1.3300 exchange rate threshold. Light trading conditions play a key role in this drop-off. Analysts predict that these circumstances will persist due to the approach of the May Day holiday.
When markets opened on Monday, the GBP/USD pair surged right away, signaling bullish sentiment from traders. Nevertheless, as the trading session matured, the currency cross experienced a slowdown, closing under the important psychological barrier of 1.3300.
Market participants commented on the weak trading environment. They blamed this largely on the lack of major economic data releases planned for this week. Uncertainty ahead of the holiday season Traders appear to be playing it safe with their positions, resulting in thinner trading volumes. Look for the quieter mobilizing to continue through International Workers Day, celebrated in most of the world. This holiday usually results in thinner markets.
The May Day holiday, celebrated in various parts of Europe and beyond, typically leads to lower liquidity as many traders take time off. This leads to greater volatility as even the minimal impacts of the small trades will have a larger impact on currency prices. Market participants believe that the GBP/USD’s recent volatility would be amplified in these type of market environments.
Analysts underscore the importance of reading on upcoming economic indicators that will directly impact the GBP/USD exchange rate. These labor market data and inflation reports will be critical. They will set the currency’s course when full trading reopens after the holiday candy rush.