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  • A combination of factors prompted some selling around GBP/USD on Wednesday.
  • The GBP bulls shrugged off comments by the BoE chief economist, Andy Haldane.
  • The risk-off mood benefitted the safe-haven USD and added to the weaker tone.

The GBP/USD pair refreshed daily lows during the early European session, albeit managed to find some support ahead of the 1.2800 mark and quickly recovered few pips thereafter.

The pair came under some renewed selling pressure on Wednesday and for now, seems to have snapped two consecutive days of the winning streak. The British pound was being weighed down by the BoE Governor Andrew Bailey’s dovish comments on Tuesday, which coupled with a modest pickup in the US dollar demand exerted pressure on the GBP/USD pair.

Speaking at an online event organized by Queen’s University Belfast, Bailey reiterated that the BoE was not out of ammunition with regards to additional quantitative easing. Bailey further added that policymakers have not ruled out the possibility of using negative interest rates but are realistic about challenges from banking retail deposits.

Separately, the BoE’s chief economist, Andy Haldane downplayed expectations of negative rates in the short-term and said that none of the conditions for negative rates has been satisfied. The GBP/USD pair, however, struggled to attract any buying interest and even shrugged off the latest optimism over a Brexit deal.

On the other hand, a turnaround in the global risk sentiment drove some haven flows toward the US dollar. A goodish pickup in the USD demand further contributed to the offered tone surrounding the GBP/USD pair. A messy end of the first US presidential debate, followed by the incumbent President Donald Trump’s warning that election results could be delayed for months added to the already uncertain environment and triggered a fresh leg down in the equity markets.

The GBP/USD pair was last seen trading around the 1.2820-15 region and had a rather muted reaction to the final UK Q2 GDP print. Later during the early North American session, the final version of the US GDP report will influence the USD price dynamics. This, along with the release of ADP report, Chicago PMI and Pending Home Sales data will be looked upon for some trading opportunities.

Technical levels to watch