GBP/USD recovers back to mid-1.4100s after choppy day
|- Having found support above 1.4100, GBP/USD has moved back into the mid-1.4100s.
- Though having now been overtaken by AUD, NZD and NOK, GBP is still a strong performer this week.
As Wednesday FX trade draws to a close and volumes this ahead of the start Thursday’s Asia Pacific session, GBP/USD look set to close with modest 0.2% or just under 30 pip gains. Despite a lack of any fundamental catalysts and amid thin volumes, the pair rocketed from the 1.4100s to as high as 1.4240 during Wednesday’s Asia Pacific session but spent most of the rest of the day gradually pulling back towards the 1.4100 handle. Over the first half of the US trading session, the pair found support at this key level and in the last few hours has started to rise again. Currently, GBP/USD trades around the 1.3940 mark and the sterling bulls will be targeting a gradual grind back to the multi-year highs set earlier during Wednesday’s session.
Driving the day
Bank of England members spoke before the UK Parliament Treasury Select Committee on Wednesday and nothing new was mentioned about the bank’s monetary policy plans going forward. On the economy, the bank noted the various downside risks faced by the economy, such as concerning Covid-19 variants, rising unemployment if the government pulls the plug on furlough and EU/UK trade disruptions, but also noted upside risks such as if the vaccine rollout goes faster than planned. Given the lack of direct policy implications, GBP was not particularly interested in the event and thus spent the majority of Wednesday’s session trading as a function of US dollar flows.
This time on Tuesday, GBP was the best performing currency in the G10 on the week. Since then, it has been overtaken by NZD (boosted by a less dovish RBNZ), AUD and NOK (both boosted in line with buoyant commodity prices and recovering stocks market sentiment). Still, the currency holds onto gains on the week versus the US dollar of nearly 1.0%. That compares to the euro, which is just 0.4% higher and the yen, which is down 0.3% on the week versus USD. It seems as though the vaccine/reopen trade is still very much alive and the main thing that might higher GBP gains going forward could be either a combination of profit-taking or fears of over-valuation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.