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GBP/USD gained some intraday traction following the release of UK Services PMI but fears of a no-deal Brexit and stronger USD prompted some fresh selling at higher levels, as FXStreet’s analysts Haresh Menghani notes.

Key quotes

“GBP/USD failed to capitalize on its intraday positive move and witnessed a dramatic turnaround on Wednesday, falling over 110 pips from daily tops.” 

“The British pound initially gained some positive traction due to an upward revision of the January UK Services PMI, which came in at 53.9 as against 52.9 estimated previously.”

“A combination of factors – including a stronger USD and Brexit-related tensions – kept a lid on any subsequent strength, rather prompted some fresh selling at higher levels.”

“The USD rallied to two-month tops on the back of upbeat domestic data, which showed that private-sector employers added 291K new jobs in January – the best since May 2015. Meanwhile, the US ISM Non-Manufacturing PMI also came in better than market expectations and edged higher to 55.5 in January as compared to 55 previous.”

“Concerns that Britain might crash out of the European Union at the end of the transition period later this year continued undermining the sterling.”