- The pound remains the top performer on Thursday among the G10.
- The cable corrects lower as the boost from the BoE to the pound decreases.
The GBP/USD It peaked slightly below 1.3700 on Thursday, reaching a two-day high after the Bank of England. During the US session, it fell back amid a stronger US dollar to 1.3650. It still remains in positive territory, far from the highs and with neutral momentum.
BoE rally partially overshadowed by stronger dollar
The pound jumped in the market after the Bank of England kept its monetary policy unchanged. The Bank of England did not report negative rates in the short and medium term and caused the rebound. The GBP/USD it went up almost a hundred pips. The pound is still the top performer in the G10.
During the US session, the US dollar resumed its rise and pushed GBP / USD away from 1.3700. It is moving around 1.3655, modestly higher during the day and far from the bottom, it hit before the BoE at 1.3565.
“The Bank of England’s decision provides the British pound with some degree of short-term support, but we do not believe the cable will escape the constant pull of a stronger USD overall. With the build-up of downside risks in GBPUSD, we believe that the pound could still advance against selected G10 counterparts with weaker fundamentals in the near term, “analysts at TD Securities said. They see downside risks in GBP / USD after the decision is fully absorbed. “We note that initial support is likely to emerge at the January 18 low (1.3520). This level also corresponds to the current DMA-55 (1.3524) ”.
The dollar holds most of its daily gains across the board, excluding the British pound. The DXY is trading at 91.50, poised to post the highest close since November 30. US economic data beat expectations, and now the focus is on Friday’s non-farm payrolls.