- GBP / USD gained somewhat for the moment on Wednesday and was back above 1.3800.
- Optimism about easing COVID-19 restrictions in the UK points to the British pound.
- The dollar remains strong limiting the pair’s rebound, in the preview of the Fed minutes.
GBP / USD quickly rebounded from an early dip in the European session and climbed back above 1.3800, just making new highs for the day at 1.3828. It remains in the zone of highs, with a bullish tone in the very short term.
The pair found demand following the decline to the 1.3775 region on Wednesday and for now, it appears to have halted Tuesday’s steep decline from around 1.3900. UK Prime Minister Boris Johnson laid out plans for the latest step to lift restriction measures in the UK, which, in turn, was seen as a key factor that extended some support to the British pound. Apart from this, a slight correction in the dollar gave more support to GBP / USD.
The dollar remains on the defensive after Tuesday’s rally and ahead of the minutes of the last Federal Reserve meeting. Expectations that the Fed will wait a longer period before reducing its asset purchases or raising interest rates sent Treasury yields down, limiting in part the strength of the dollar.
That said, the prevailing risk mood – amid concerns about the spread of the highly contagious delta variant of the coronavirus – extended some support to the dollar, on demand for safe haven assets. What happens to the equity markets, the bond markets and the Fed minutes may be key for GBP / USD.