GBP/USD retreats sharply from session tops, back below 1.3100 mark
- GBP/USD failed to capitalize on its intraday positive move amid some follow-through USD strength.
- Wednesday’s less dovish FOMC minutes, weaker risk sentiment extended some support to the buck.
- Any update from the Brexit negotiations will influence the British pound and provide some impetus.
The GBP/USD pair refreshed daily tops, around mid-1.3100s during the early North American session, albeit quickly retreated around 60 pips thereafter. The pair has now retreated back below the 1.3100 mark and was last seen trading in the neutral territory.
Following an early dip to the 1.3065 region, or weekly lows, the pair staged a modest intraday rebound and recovered a part of the previous day's sharp intraday slide of around 175 pips from YTD tops. The uptick lacked any obvious catalyst and fizzled out rather quickly amid some follow-through buying around the US dollar.
The greenback was back in demand after the minutes of the last FOMC meeting held on July 28-29 offered few clues on whether the Fed will adopt a more dovish policy framework in the months ahead. Moreover, a number of Fed members judged that yield caps and targets were not warranted as it would likely provide only modest benefits.
The greenback maintained its bid tone and seemed rather unaffected by Thursday's disappointing US macro data. In fact, the Philly Fed Manufacturing Index for August fell more than expected to 17.2 as compared to 21 expected. Separately, the US Initial Jobless Claims unexpectedly jumped to 1.106 million as against consensus estimates pointing to a fall to 925K expected from the previous month's upwardly revised reading of 971K.
Meanwhile, the USD bulls largely shrugged off a steep decline in the US Treasury bond yields, instead took cues from a turnaround in the global risk sentiment. A weaker trading sentiment around the equity markets extended some support to the greenback's perceived safe-haven status and exerted some pressure on the GBP/USD pair.
It will now be interesting to see if the pair is able to attract any dip-buying at lower levels or extend the slide further towards challenging the key 1.3000 psychological mark as investors await fresh updates from the ongoing EU-UK Brexit talks.
Technical levels to watch