GBP/USD retreated from tops, back near 1.2300 mark after Powell’s speech

The GBP/USD pair refreshed daily tops, around the 1.2340 region during the early North American session, albeit quickly retreated few pips thereafter.

Having found some support near mid-1.2200s, the pair staged a goodish intraday bounce from three-week lows and gained some traction in reaction to slightly less weak UK macro releases. Data released this Wednesday showed that the UK economy contracted by 5.8% in March and 1.6% during the first quarter of 2020 as compared to consensus estimates of -8.0% and 2.1%, respectively.

Adding to this, the UK manufacturing and industrial production figures also fell less than market expectations and further underpinned the British pound. This comes amid some renewed US dollar selling bias, which provided an additional boost to the major and remained supportive of the GBP/USD pair's goodish intraday positive move of around 90 pips.

Meanwhile, a positive mood around the equity market further dented the greenback's relative safe-haven status against its British counterpart. The USD remained depressed following the release of softer US Producer Price Index (PPI) for April, albeit managed to find some respite from the Fed Chair Jerome Powell's highly anticipated speech on current economic issues.

Powell reiterated that the Fed will continue to use tools to their fullest until the crisis has passed and the recovery well underway. Powell further added that the outlook remains highly uncertain and that the downside risks are significant, albeit did not offer any signal towards the possibility of negative rates.

The pair dropped back below the 1.2300 mark, retreating around 40-50 pips from daily swing highs and remains vulnerable to extend the downfall amid the formation of a bearish double-top pattern on short-term charts.

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