- Greenback turns sharply lower across the board during the American session.
- Pound erases losses versus USD and EUR, favoured by risk appetite.
The GBP/USD pair bottomed at 1.2265, the lowest in two weeks before rebounding 85 pips, climbing back above 1.2350. The move to the upside was triggered by a reversal of the US dollar.
As of writing, Cable trades at 1.2350 with a bullish intraday momentum, as price hold above the 20-hour moving average (1.2345). The next resistance is located at 1.2380/85 followed by the daily high at 1.2420. A slide back below 1.2300 would increase the odds of a test of the 1.2200 area.
Dollar turns negative quickly
The US dollar reversed during the last hours as the Fed futures markets started to price in negative interest rates by January 2021. The DXY fell from weekly highs back to the 100.00 area, erasing daily gains. At the same time, US yields printed fresh lows. The 10-year stands at 0.65%, after hitting on Wednesday 0.74%.
Earlier on Thursday, the Bank of England left monetary policy unchanged. Two members asked for another 100 billion of purchases. “We look for the BoE to announce an additional £100bn of QE at its next meeting on 18 June, followed by an additional £50bn of QE at the September meeting”, forecast analysts at TD Securities. The pound initially strengthened but then turned to the downside.