GBP/USD off lows, finds some support near mid-1.3700s

• GBP/USD witnessed some selling for the third consecutive session on Wednesday.
• COVID-19 jitters weighed on the risk sentiment and benefitted the safe-haven USD.
• Retreating US bond yields capped the USD and helped limit the downside for the pair.

The GBP/USD pair remained depressed through the mid-European session, albeit has managed to rebound few pips from one-week lows, around mid-1.3700s touched earlier this Wednesday.

The pair extended its retracement slide from the vicinity of the 1.39000 mark, or post-NFP swing highs and witnessed some selling for the third successive day amid sustained US dollar buying interest. The recent strong rally in the US Treasury bond yields continued acting as a tailwind for the greenback, which got an additional boost from a generally softer risk tone.

Worries that resurgence in COVID-19 cases could derail the global economic recovery dented investors' appetite for perceived riskier assets and drove flows towards traditional safe-haven assets. The global flight to safety triggered a modest pullback in the US bond yields, which capped gains for the USD and assisted the GBP/USD pair to find some support near mid-1.3700s.

Meanwhile, the UK and EU remain at odds on the way forward for the Northern Ireland Protocol. This, along with British Prime Minister Boris Johnson's plans to introduce a new 1.25% health and social-care levy on earned income, continued acting as a headwind for the British pound. This, in turn, should keep a lid on any meaningful recovery for the GBP/USD pair.

There isn't any major market-moving economic data due for release on Wednesday, either from the UK or the US. However, a scheduled speech by New York Fed President John Williams, along with the US bond yields might influence the USD price dynamics. Apart from this, the broader market risk sentiment might further produce some trading opportunities around the GBP/USD pair.

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