- 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. 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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.