GBP/USD rebounds back to the 1.2150 area,  supported by a retreat of the US Dollar

• Pound erases daily losses against the US Dollar, moves away from two-year lows.  
• Cable still remains under pressure amid Brexit concerns, BoE ignored.  

The GBP/USD pair rebounded during the American session, rising from 1.2078 to 1.2154. As of writing, it hovering around 1.2140/45, practically flat for the day and far from the lows.  

The move to the upside took place amid a slide of the US Dollar across the board. The DXY peaked earlier today at 98.96 and now if flat at 98.60. A decline in US yields contributed to weakening the greenback. Still, it remains above the level it had before yesterday’s FOMC meeting.  

US ISM manufacturing data came in below expectations and also added to the negative tone around the greenback. Now attention turns to tomorrow NFP report. Payrolls are expected to show an increase of 164K.  

In the UK, all continue to be related to Brexit. Today the Bank of England kept monetary policy unchanged, having no impact on the pound. “We believe that the Bank of England took a dovish turn, as it now needs to also see “some recovery in global growth,” on top of a smooth Brexit transition, in order to raise rates in the future. Even in the event of a smooth transition though, the Bank’s forecasts suggest that it wouldn’t need to raise rates more than once over the next three years in order to see inflation reach the 2.0% target“, said TDS analysts.  

Regarding the pound, they think it may stabilize a bit near-term, but they warn “rallies look likely to be sold as investors seek better levels to enter or add to existing GBP shorts.”

From a technical perspective, the bias still points to the downside but today’s reversal in the USD could point to some short-term consolidation. The GBP/USD was able today to remain above the 1.2070/80 support that protects the critical 1.2000.