GBP/USD finds support ahead of 1.21, recovers toward 1.2150

• Germany’s Scholz says no changes expected in Brexit situation.
• US Pres. Trump says Fed and Powell are their only problems.
• US Dollar Indes stays flat on day above 98 ahead of FOMC minutes.

The GBP/USD pair rose on Tuesday on hopes of the EU softening its tone on the Irish backstop but failed to build on these gains and changed its direction on Wednesday. After dropping to a daily low of 1.2117, the pair staged a recovery and was last seen trading at 1.2143, still losing 0.21% on a daily basis.

Contradicting comments on Brexit

German Chancellor Merkel on Tuesday said that they will think about practical solutions to the Irish backstop problem and added that this was a question of the political declaration on future ties rather than the Withdrawal Agreement, reviving hopes of the sides coming to terms without renegotiating the Withdrawal Agreement.  

However, earlier today,  German President Frank-Walter Steinmeier told reporters that it was unlikely that the negotiations on the backstop will get going again. Echoing the same sentiment, Finance Minister Scholz said that no one should expect any changes to the Brexit Deal and forced the British pound to lose interest.

On the other hand, the Greenback is having a difficult time finding demand before the FOMC releases the minutes of its August meeting later in the session and allowing the pair to retrace its fall. Meanwhile, US President Donald Trump, via Twitter, today said that they were doing great with China and other trade deals but repeated that the main problems they were facing the Federal Reserve and Chairman Jerome Powell. At the moment, the US Dollar Index is flat on the day at 98.16.

Technical levels to watch for