- GBP / USD struggled to hold its intraday gains at two-day highs around the 1.3670 region.
- A modest intraday rebound in the USD was seen as a key factor putting some pressure on the pair.
- The disappointing US ADP report limited the USD recovery attempt ahead of the FOMC Minutes.
The pair GBP/USD it fell around 70 pips from the daily highs and fell to 1.3600 in the last hour, although it quickly recovered a few pips thereafter. The pair was last seen trading in the 1.3625-30 region, almost unchanged for the day.
The British pound witnessed some selling after UK Prime Minister Boris Johnson said on Wednesday that the end of the lockdown will not be a big bang and that it will be a slow collapse. It is worth remembering that a third nationwide lockdown in the UK is already in effect until at least February 15.
The comments added to growing market concerns about the possible economic consequences of tighter restrictions and could also have boosted prospects for additional monetary easing by the Bank of England. Therefore, market participants will closely follow the speech of the Governor of the Bank of England, Andrew Bailey, later today.
On the other hand, the US dollar saw a modest recovery from its 2-1 / 2-year lows, although it lacked a strong follow-up. Expectations of a Democratic victory in the crucial US Senate second-round elections in the Gerogis stage have raised prospects for additional US fiscal stimulus.
This, coupled with speculation that the Fed will keep interest rates lower for a longer period, could prevent USD bulls from making aggressive bets. On the US economic data front, the disappointing release of the ADP report also did little to provide a significant boost to the dollar.
This, in turn, helped limit any further declines for the GBP / USD pair as market participants now await the release of the latest minutes of the FOMC meeting. Investors will closely examine the minutes for clues about the Fed’s policy outlook, which will influence the USD’s short-term dynamics.
Technical levels
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