- GBP/USD met with some fresh supply on Wednesday amid renewed USD buying.
- A modest pickup in the US bond yields continued underpinning the greenback.
- An upward revision of the UK Services PMI did little to provide any impetus.
The GBP/USD pair maintained its offered tone near mid-1.3600s and moved little following the release of the final UK Services PMI.
The pair failed to capitalize on the previous day’s recovery move from the 1.3610 area, or one-week lows and witnessed some fresh selling on Wednesday. Expectations for a massive US fiscal stimulus continued pushing the US Treasury bond yields higher. This, in turn, underpinned the US dollar demand, which was seen as one of the key factors exerting pressure on the GBP/USD pair.
It is worth reporting that Democrats in the US Congress on Tuesday took the first step toward advancing President Joe Biden’s proposed $1.9 trillion coronavirus aid plan without Republican support. The Senate voted to open debate on a fiscal 2021 budget resolution with coronavirus aid spending instructions, unlocking a legislative tool to pass stimulus amid Republican opposition.
Meanwhile, the GBP/USD pair had a rather muted reaction to an upward revision of the UK Services PMI, which was finalized at 39.5 for January as against the 38.8 estimated in the preliminary report. The reading, however, still pointed to a deep contraction in the UK’s dominant services sector and did little to impress the GBP bulls or provide any meaningful impetus to the GBP/USD pair.
That said, the downside is likely to remain cushioned amid diminishing odds for any rate cut by the Bank of England (BoE) in 2021. Hence, the key focus will be on the BoE Super Thursday, which will play a key role in determining the GBP/USD pair’s next leg of a directional move.
In the meantime, the release of the US ISM Services PMI might influence the USD price dynamics and provide some impetus. Apart from this, the broader market risk sentiment and developments surrounding the coronavirus saga will also be looked upon to grab some meaningful opportunities around the GBP/USD pair.
Technical levels to watch
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