- GBP / USD gained strong follow-up traction for the fourth consecutive session on Thursday.
- The post-FOMC USD selloff continued unabated and continued to support the strong bullish move.
- Softer US economic releases did not provide any respite for the USD or hinder momentum.
The pair GBP/USD maintained its strong tone offered during the early days of the US session and updated the multi-week high around the 1.3970-75 region in reaction to weaker US macroeconomic releases.
The pair built on its recent strong rebound from the 1.3570 area, or the lowest level since February, and rose for the fourth consecutive session on Thursday. This also marked the sixth day of a positive move in the previous seven and was sponsored by a combination of factors.
In the absence of negative Brexit-related headlines, the British pound remained well supported by the downtrend in UK Delta infections. Adding to this, the UK’s most prominent epidemiologist Neil Ferguson said that the end of the pandemic could be only a few months away.
On the other hand, the US dollar continues to be weighed down by the dovish tone of Fed Chairman Jerome Powell in the press conference after Wednesday’s meeting. Powell emphasized that they were far from making substantial progress on the jobs and was also cautious about the downsizing.
Aside from this, a generally positive mood in the equity markets further undermined the safe-haven dollar. Thursday’s disappointing second-quarter US GDP figure and above-expected weekly initial job application data data also did little to support the USD.
The first estimate showed that the world’s largest economy expanded at an annualized rate of 6.5% during the April-June period. The reading marked a modest rally from 6.4% in the prior quarter, but disappointed consensus estimates by a large margin and weighed further on the already weaker dollar.
The data reaffirmed market expectations that the Fed will maintain its ultra-flexible monetary policy stance for a longer period. This, in turn, should continue to act as a headwind for the dollar and pave the way for an extension of the current positive momentum of the GBP / USD pair.
Technical levels
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