- Some renewed USD weakness helped regain some traction on Thursday.
- The uptick is likely to remain limited amid persistent Brexit uncertainties.
- Investors on Thursday will also take cues from important UK macro data.
Following the previous session’s rollercoaster ride, the GBP/USD pair managed to regain some positive traction on Thursday and was last seen trading around the 1.2225-30 region.
It is worth reporting that the pair on Wednesday rallied back to the 1.2300 neighbourhood in reaction to the UK Times report that the EU is prepared to concede a time-limit on the Irish backstop. The knee-jerk bullish spike fizzled out quickly, rather met with some aggressive supply and dragged the pair back into the negative territory after the Northern Irish Democratic Unionist Party (DUP) rejected the EU’s concession on Brexit and the EU officials denied the report.
Weaker USD extended some support
Meanwhile, bulls continued showing some resilience below the 1.2200 round-figure mark and some renewed US Dollar weakness helped limit any further losses. With Wednesday’s FOMC meeting minutes doing little to dampen prospects for yet another interest rate cut in October, the ongoing slide in the US Treasury bond yields undermined demand for the Greenback and turned out to be one of the key factors providing a minor lift to the major.
It, however, remains to be seen if the pair is able to capitalize on the momentum or the uptick is still seen as an opportunity to initiate some fresh bearish positions amid increasing odds of the UK’s exit from the EU without a deal. Apart from the incoming Brexit-related headlines, Thursday’s packed UK economic docket might further influence the broader market sentiment surrounding the British Pound and provide some short-term trading impetus.
The UK macro data scheduled for release this Thursday includes the UK monthly GDP print for August along with Manufacturing and Industrial Production figures for the same month. Recent weakness in UK PMI data has revived recessionary fears in the UK and hence, any positive surprise might be enough to prompt some near-term short-covering move, albeit the attempted recovery seems more likely to remain capped amid persistent Brexit uncertainties.
Technical levels to watch