GBP/USD saved by Dollar’s weakness, rises back above 1.2650

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  • Cable managed to avoid so far another daily loss supported by a slide of the greenback. 
  • DXY reversed sharply from monthly highs as US data triggered a correction. 

The GBP/USD bottomed earlier today slightly above 1.2600, the lowest since early January. During the American session rebounded supported by a US Dollar sell-off and even reach a daily high at 1.2683. Over the last hours, it has remained steady moving between 1.2655 and 1.2680, marginally higher for the day. 

Despite being able to post a daily gain after a rebound of more than 50 pips that could signal some stabilization ahead, the Pound shows no strength amid UK political uncertainty and also on the back of risk aversion. 

British Prime Minister Theresa May is under pressure and markets are not expecting to remain in her position. The Withdrawal Agreement Bill has no support. Developments around Brexit and politics are likely to keep crossing wires. On Friday, the UK’s Office for National Statistics will publish the retail sales data while in the US the preliminary April durable and capital goods orders are due. 

The correction of the greenback started on Thursday after the release of weaker than-executed US data. Housing numbers and the PMIs came in significantly below expectations. Despite the reversal in the US dollar equity and crude oil prices kept falling. 

The events on Thursday around the US Dollar offset Brexit and Pound’s soft tone. The rebound from the 1.2600 could offer some relief for the next sessions to the GBP/USD. The key short-term support now might be seen at 1.2650 and 1.2600. 
 

 

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