GBP / USD falls to 1.3900 as USD strengthens on aggressive comments from the Fed

• GBP / USD lost its traction after climbing above 1.3950.
• The US dollar index saw a decisive rally after falling below 92.00.
• Aggressive Clarida comments from the Fed appear to be giving the USD a boost.

The pair GBP/USD it rose to a daily high of 1.3958 in the early trading hours of the US session, but failed to preserve its bullish momentum. With the dollar regaining its strength, the pair reversed its direction and was last seen posting small daily losses at 1.3901.

DXY clears ADP-inspired losses

Earlier in the day, disappointing US labor market data weighed on the USD. The Automatic Data Processing Research Institute (ADP) reported Wednesday that private sector employment increased by 330,000 in July, disappointing analyst estimates of 692,000 by a wide margin.

Although the US Dollar Index (DXY) fell to a daily low of 91.90 after the ADP data, aggressive comments from Fed Vice Chairman Richard Clarida helped it regain its traction.

Clarida noted that she can certainly see that the Fed will announce a gradual reduction later in the year, adding that she expects the conditions for the Fed to start raising interest rates by the end of 2022. Currently, the DXY is up 0.25%. on the day at 92.30.

On Thursday, the Bank of England (BoE) will announce its monetary policy decisions. In anticipating this event, “a moderate decision that would consist of uncertainty and promises of support for the economy does not have a full price,” said FXStreet analyst Yohay Elam. “There are good reasons for the BOE to deliver a cautious message on its August ‘Super Thursday. That would weigh on GBP / USD, but probably not for long.”

Technical levels