- GBP/USD staged a decisive rebound after dropping below 1.4100.
- US Dollar Index remains on track to close little changed above 90.00.
- Focus shifts to mid-tier macroeconomic data releases from the UK.
After rising toward 1.4200 on the back of Bank of England (BOE) Chief Economist Andy Haldane’s hawkish comments on Wednesday, the pair lost its traction and closed in the negative territory for the second straight day. The lack of progress in the UK-EU talks on the Northern Ireland Protocol made it difficult for the GBP to preserve its strength.
Although the pair extended its slide and dropped below 1.4100 on Thursday, it managed to stage a decisive rebound and was last seen gaining 0.35% on a daily basis at 1.4170.
USD fails to capitalize on May inflation data
Earlier in the day, the data from the US showed that the Consumer Price Index (CPI) in May rose to 5% on a yearly basis from 4.2% in April. This reading surpassed the market expectation of 4.7% and allowed the greenback to gather strength in the early American session.
However, the improving market sentiment forced the USD to lose interest and provided a boost to GBP/USD. Currently, the US Dollar Index is down 0.1% on the day at 90.04 and the S&P 500 Index looks to register its highest daily close above 4,240.
Meanwhile, the sharp drop witnessed in the EUR/GBP pair following the European Central Bank’s policy announcements seems to be helping the GBP preserve its strength on Thursday.
On Friday, the UK’s Office for National Statistics (ONS) will release Industrial Production, Manufacturing Production and Gross Domestic Product (GDP) data for April.
Technical levels to watch for