GBP/USD gained some follow-through traction

The GBP/USD pair maintained its bid tone through the first half of the European session and was last seen trading near-weekly tops, just below mid-1.3900s. The pair built on the previous day's rebound from the 1.3875 support area and gained some follow-through traction for the second consecutive session on Wednesday. The British pound remained well supported by the optimism over the declining trend of new COVID-19 cases in the UK. Bulls further took cues from an upward revision of the UK Services PMI for July. The data provided further evidence of a more robust UK economic recovery, which has been fueling speculations about a possible hawkish shift from the Bank of England. This comes on the back of the European Union's decision to pause legal proceedings against the UK over the Northern Ireland protocol dispute, which further acted as a tailwind for the sterling.

On the other hand, the US dollar, so far, has struggled to attract any meaningful buying amid expectations that the Fed will stick to its ultra-lose policy stance for a longer period. That said, concerns about the fast-spreading Delta variant of the coronavirus and a modest uptick in the US Treasury bond yields helped limit any deeper losses for the USD. Investors might also be reluctant to place any aggressive bets, rather prefer to wait on the sidelines ahead of the upcoming BoE monetary policy meeting on Thursday. The key focus will be on the BoE's inflation outlook, which, in turn, will play a key role in influencing the GBP price dynamics in the near term and provide a fresh directional impetus to the GBP/USD pair. In the meantime, Wednesday's US economic docket, highlighting the releases of the ADP report on private-sector employment and ISM Services PMI will be looked upon for some impetus. Apart from this, the US bond yields and the broader market risk sentiment will drive the greenback, allowing traders to grab some short-term opportunities around the GBP/USD pair.