GBP/USD bounces back to 1.2540 amid USD pullback
- Bulls fight back control as the US dollar extends post-NFP retreat.
- BOE rate cut bets, weak UK data and Brexit worries to keep upside capped?
Fresh buyers appeared once again near the 1.2510 region, prompting another bounce in the GBP/USD pair to regain the 1.2550 barrier, as the recovery mode from six-month troughs of 1.2481 remains intact so far this Monday.
The sentiment around the spot is mainly driven by the US dollar price-action, as the greenback corrects further from two-week tops reached against its main competitors following the stronger US Non-Farm Payrolls (NFP) data. The NFP surprise poured cold water on aggressive Fed rate cut bets. Markets have now scaled back their expectations of a 50 bps Fed rate cut this month.
However, markets remain wary whether the Cable will manage to extend the recovery amid increased odds of a Bank of England (BOE) rate cut and the recent streak of disappointing UK PMI readings. Moreover, looming concerns over a no deal Brexit and increased UK political uncertainty continue to remain a weight on the pound.
Looking ahead, the focus now remains on the Fed Chair Powell’s testimony, UK GDP report and the FOMC June meeting’s minutes due later this week for fresh direction on the major. In the meantime, the USD dynamics, risk trends and Brexit-related headlines will continue to influence prices.
Levels to watch