GBP/USD consolidates lower in broad risk-off

FX markets are showing a distinct risk-off flavour on Thursday.

The mood is weighing on currencies such as Sterling that has fallen to its lowest against the euro in more than three weeks and to just pips away from the early July lows of 1.3731.

At the time of writing, GBP/USD is trading at 1.3777, down 0.15% on the day after falling from a high of 1.3805 to a low of 1.3741.

There has been a broader shakeout in FX markets that has aided the safe havens in the wake of minutes of the last Federal Reserve meeting that confirmed its policymakers were moving towards tapering this year.

The minutes showed that some Fed members saw the conditions for tapering being met sooner than they had anticipated at previous meetings.

''The bottom line is that some are pushing for tapering sooner rather than later and some are counselling patience.  With this split in place, it seems tapering is not likely to be imminent,'' analysts at Brown Brothers Harriman explained. 

'' While we expect the debate to continue and intensify at the July 27-28 meeting, we don't think the Fed will commit to tapering yet.  That said, we still think the Fed tapers before year-end and may provide more clarity at the August Jackson Hole Symposium or the September 21-22 FOMC meeting.''

Meanwhile, tomorrow’s set of UK macro releases, Industrial Production and May’s monthly Gross Domestic Produce, will be important for the pound's immediate direction.

Fo the week so far, sterling has found some support on British Prime Minister Boris Johnson's plans to end social and economic COVID-19 restrictions in England.

However, the number of coronavirus cases could be set to climb as measures are relaxed which will keep investors anxious.

The broad-based dollar strength of late could also reassert itself which will be watched for considering The US economy's outperformance.