GBP/USD stays under pressure below 1.33 as greenback preserves its strength
|- GBP/USD erases more than 150 pips from its daily highs.
- US Dollar Index approaches the critical 95 mark.
- UK government official expects a desired Brexit outcome.
The USD's strength remains as the main theme of the FX space on Thursday. The GBP/USD pair, which touched a daily high of 1.3445 earlier in the day, broke below the 1.33 mark in the NA session to refresh its lowest level since June 1 at 1.3270. As of writing, the pair was trading at 1.3280, down 0.7% on the day.
Yesterday's hawkish FOMC statement and Chairman Powell's upbeat speech failed to wale up the USD bulls as investors refrained from taking large positions ahead of today's European Central Bank meeting. With the ECB failing to satisfy the markets with its tapering announcement and Draghi doing his best to avoid delivering clear remarks regarding the timing of a rate hike, investors assessed the USD as the currency with a higher potential of gaining value.
"The announcement that the ECB expects interest rates "to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary to ensure that inflation is back at target" is a signal that sequencing is clearly longer than the six months markets had been anticipating for a long while. A rate hike before September 2019 looks highly unlikely," ING analysts commented on the ECB's statement.
The EUR/GBP pair also lost around 100 pips on the EUR sell-off and possibly helped the pair limit its losses.
The US Dollar Index broke above the 94 mark and extended its gains all the way up to 94.81 before steadying a little below that recent high. At the moment, the index is adding 1.25% at 94.72.
Meanwhile, the UK's Brexit department's spokesperson crossed the wires earlier in the session and said that they were confident they would be able to reach a good Brexit agreement with the EU and the Parliament would back the deal.
Technical levels to consider
The initial support for the pair aligns at 1.3200 (psychological level/May 29 low/Nov. 19, 2017, low) ahead of 1.3120 (Nov. 12, 2017, low) and 1.3040 (Nov. 3, 2017, low). On the upside, resistances could be encountered at 1.3350 (20-DMA), 1.3440 (Jun. 6 high) and 1.3500 (psychological level).
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