“¢ The intraday USD uptick turns out to be short-lived despite rebounding US bond yields.
“¢ Traders found an incentive to cover their short positions amid increasing Fed rate cut bets.
The GBP/USD pair quickly reversed an early European session dip and spiked to the 1.2700 neighbourhood, or fresh one-week tops in the last hour.
Having touched a daily low level of 1.2642 following the disappointing release of UK construction PMI, the pair witnessed an intraday turnaround and moved back into the positive territory for the third consecutive session.
Despite a goodish rebound in the US Treasury bond yields, the US Dollar failed to capitalize on the intraday positive move and seemed to be one of the key factors behind the pair’s strong intraday rally of over 50-pips.
Firming market expectations that global trade jitters may force the Fed to cut interest rates by the end of the year continued hurting the greenback and provided an incentive for traders to cover their short positions.
St. Louis Fed President James Bullard boosted those hopes on Monday when he said that a rate cut may be warranted soon given the rising risk to economic growth as well as weak US inflation.
Hence, the key focus will remain on the Fed Chair Jerome Powell’s scheduled speech on Tuesday, which will be looked upon for fresh clues over the central bank’s monetary policy outlook and provide a fresh directional impetus.
Technical levels to watch
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