GBP/USD bulls are back in town as the US dollar stumbles onto its backfoot

GBP USD is currently trading 1.3190 and travelling between a low of 1.3064 and a high of 1.3201. 

In recent trade, the Bulls picked up the baton with the price jumping sharply to test the 1.32 area.

There is widespread dollar weakness following yesterday's broad recovery against G10 FX with the DXY posting its largest single-day gain since June. 

At the time of writing the DXY is trading at 92.83, down 0.18% from a high of 93.24 to a low of 92.75.

The US dollar started to show signs of a correction in anticipation of the Federal Open Market Committee minutes, an event that served to underpin USD strength throughout the following sessions before posting a fresh corrective high during the London and New York crossover.

The sell-off in USTs was short-lived, however, and the dollar finds itself back under pressure as the market continues to expect easing steps in its September meeting. 

Global equities were a sea of red following the FOMC Minutes that continued to stress significant economic uncertainty and downside risks due to COVID-19. 

Meanwhile, UK July inflation surprised significantly to the upside earlier in the week, with headline inflation jumping to 1.0% YoY while Core Inflation rose by its strongest since July 2019 to 1.8% YoY.

Will there be any Brexit progress reports?

For the remainder of the week, traders will be looking to Retail Sales, PMIs and will also be on the lookout for Brexit-update headlines to see if any progress has been made in this week's talks.

The concerns are that the UK could be facing a scenario of a return to WTO rules on trade with Europe if progress is not made in Autumn, in time for a deal to be ratified before the end of the year.

In the case that the UK finds its self without a deal, WTO terms would potentially increase the duration and impact of the recession, leaving the pound vulnerable to the circumstances which could result in a negative Bank rate.

For tomorrow's data, UK activity likely rose gradually through August as most countries continued to ease up COVID restrictions (local shutdowns excepted), analysts at TD Securities said. 

We see upside risks and expect small gains across most key PMI measures, indicating recovery, but still at a relatively subdued pace.

GBP/USD levels