• Renewed USD weakness accelerates further on dovish Fed commentary.
  • Technical buying above 1.2600 handle aggravates the positive momentum.
  • Focus now shifts to the UK retail sales data ahead of the BoE policy decision.

The GBP/USD pair built on the previous session's recovery move from the vicinity of the key 1.2500 psychological mark and gained some strong follow-through traction on Wednesday. The initial leg of the uptick was supported by a modest US Dollar weakness, positive trade-related developments and mostly in line UK consumer inflation figures for the month of May. On the UK political front, Boris Johnson won another round of Conservative leadership ballot on Tuesday and received 143 votes, though did little to influence the price action. 

Meanwhile, the positive move took along some short-term trading stops placed near the 1.2600 handle, prompting some intraday short-covering move and got an additional boost in the wake of dovish sounding FOMC policy statement. As was widely expected, the Fed left interest rates unchanged on Wednesday but signalled that it was ready to lower interest rates to combat growing global and domestic risks. The US central bank further added that it would "act as appropriate to sustain the expansion”, while the so-called dot-plot indicated that it is unlikely to cut borrowing costs before 2020. 

The post-FOMC USD weakness helped the pair to continue scaling higher for the third consecutive session on Thursday. Market participants now look forward to the UK monthly retail sales data for some short-term impetus ahead of the more relevant BoE monetary policy update. The UK central bank is anticipated to maintain status quo amid persistent Brexit uncertainties, turning this to be a rather non-event for the GBP traders. Later during the early North-American session, the US economic docket - featuring the release of Philly Fed Manufacturing Index and the usual initial weekly jobless claims, might influence the USD price dynamics and further collaborate towards producing intraday trading opportunities. 

From a technical perspective, the pair has been in a strong recovery mode over the past couple of trading session and the ongoing momentum could further get extended towards 1.2750-60 heavy supply zone. A convincing break through the mentioned barrier might prompt some additional short-covering move and assist the pair to aim towards reclaiming the 1.2800 round figure mark. On the flip side, the 1.2650 region is likely to protect the immediate downside, below which the pair could extend the pullback but now seems more likely to find decent support and defend the 1.2600 round figure mark.

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

Dollar in trouble, EUR/USD recovers the 1.1000 level

The American currency came under selling pressure, although the EUR/USD pair is a laggard, barely above the 1.1000 figure. Trump´s impeachment process seems to be behind the latest slide.

EUR/USD News

GBP/USD approaches 1.2900 as the greenback eases

The GBP/USD pair is at fresh weekly highs in the 1.2880 region, as speculative interest moved away from the dollar, and in spite of poor UK data.

GBP/USD News

USD/JPY slumps to fresh 10-day lows near 108.30 on falling US T-bond yields

The USD/JPY pair came under renewed bearish pressure during the American tracing hours and slumped to its lowest level in ten days at 108.25 as the dismal market mood allowed the JPY to continue to gather strength against its rivals as a safe haven.

USD/JPY News

US Dollar Index: DXY suck at monthly highs near 98.40 level

DXY (US Dollar Index) is trading in a bull trend above the main daily simple moving averages (DMAs). This Thursday the Greenback is once again challenging the 98.40 level while trading just above the 50 DMA.

US Dollar Index News

Gold: the $1,470 regions caps the upside

Prices of the precious metal keep the positive performance in the second half of the week, although the $1,470 region continues to cap the upside for the time being.

Gold News

Forex Majors

Cryptocurrencies

Signatures