- A goodish pickup in the USD demand prompted fresh selling around GBP/USD on Wednesday.
- The downside is likely to remain limited as the focus remains on the BoE meeting on Thursday.
- Investors look forward to the US ADP report and ISM Services PMI for some trading impetus.
The GBP/USD pair maintained its offered tone through the mid-European session and dropped to fresh daily lows, around the 1.3620-15 region in the last hour.
Following the previous day’s good two-way price swings, the pair came under some renewed selling pressure on Wednesday and was pressured by a goodish pickup in the US dollar demand. Expectations for a massive US fiscal stimulus continued pushing the US Treasury bond yields higher, which, in turn, extended some support to the greenback.
The British pound was further weighed down by the UK Services PMI, which was finalized at 39.5 for January. The reading was slightly better than 38.8 estimated earlier but pointed to the sharpest contraction in the sector since May 20. This added to worries about the potential economic fallout from coronavirus-induced lockdown measures.
Despite the negative factors, the downside seems cushioned as investors might refrain from placing aggressive bets ahead of the Bank of England meeting on Thursday. This makes it prudent to wait for some follow-through selling below the 1.3610-1.3600 region before traders start positioning for any further near-term depreciating move.
In the meantime, Wednesday’s release of the ADP report on the US private-sector employment and the US ISM Services PMI will be looked upon for some impetus. This, along with the broader market risk sentiment, might influence the USD price dynamics and assist traders to grab short-term opportunities around the GBP/USD pair.
Technical levels to watch
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