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  • GBP/USD regained traction and turned higher for the third straight day on Wednesday.
  • Some renewed USD selling bias negated softer UK CPI report and remained supportive.
  • BoE Governor Bailey’s testimony did little to provide any impetus ahead of FOMC minutes.

The intraday USD selling bias picked up pace during the early North American session and lifted the GBP/USD pair to fresh session tops, closer to the 1.2300 mark.

The pair initially edge lower on Wednesday and dropped to the 1.2220 area following the release of softer-than-expected UK consumer inflation figures for April. The downtick turned out to be short-lived, rather was quickly bought into amid the emergence of some fresh US dollar selling bias.

Despite doubts over a potential COVID-19 vaccine, strong corporate earnings provided a strong boost to the US equity futures and weighed on the greenback’s relative safe-haven status. A broad-based USD weakness assisted the pair to move back into the positive territory for the third consecutive session.

The British pound lost some traction after the Bank of England Governor Andrew Bailey did not rule out the possibility of negative interest rates. Bailey, alongside three MPC members was testifying before the Treasury Select Committee on the economic impact of the coronavirus.

Even from a technical perspective, the pair has been struggling to find acceptance above 50-day SMA, making it prudent to wait for some follow-through buying beyond the overnight swing high, around the 1.2300 mark. The move will confirm a bullish breakthrough 50-day SMA and set the stage for a further near-term appreciating move.

Moving ahead, market participants now look forward to the release of the minutes of the latest FOMC meeting. The minutes will influence the USD price dynamics and produce some meaningful trading opportunities later during the US session.

Technical levels to watch