The dollar came under pressure, offsetting its earlier gains in Asian trading on Wednesday after the sterling slightly recovered from its significant losses amid the last session.
The pound rallied about 1.5 percent and settled at $1.2301 GBP, after posting declines of $1.2086, its lowest drop on Tuesday. Meanwhile, declines headed toward 31-year low of $1.1450 on Friday as market participants remained worried over Brexit’s aftermath.
Subsequently, sterling finds support after reports came that British Prime Minister Theresa May agreed on allowing Parliament to vote on her Brexit plan.
An analyst at Mizuho Securities in Tokyo Masafumi Yamamoto said, "May will accept voting at the Parliament, which is giving the pound a short-term boost, but I'm not sure it's long-lasting."
"Its latest fall was too much and too rapid, so it's natural to see some rebound," he said. "It seems the dollar's weakness against sterling today is affecting the other dollar currency pairs as well, which is also natural."
The dollar index, which measures the greenback against a basket of currency rivals, dipped 0.2 percent to 97.504 at the close of trade after posting gains of 97.758 on Tuesday, marking its highest level since March.
Analysis for GBP/USD
The GBP/USD pair slipped last week after the pair posted declines with 500 basis points and settled at 1.2422 in late trade. The pair sees slight drop, which posted below 1.20 level before reversing directions.
Ahead of the recent flash crash that weighed on GBP/USD on Thursday, the sterling turned into positive amid the release front. Based on the recent data, all PMI reports were likely better-than-expected and Manufacturing Production posted slight rally, adding an optimism on the three consecutive drops.
· BRC Retail Sales Monitor is scheduled to be released later this month, which allows analysts to forecast the official retail sales data. The August index lost about 0.9%, posting below the 1.1% gain a month earlier.
· RICS House Price Balance serves highlights the UK housing market level of activity. The indicator gained about 12% in August, topping the estimated 5% level.
· BoE Credit Conditions Survey is scheduled to be released per quarter, which suggests stronger borrowing level corresponds to a higher spending. Thus, if the report turned into positive, the sterling is expected to climb.
Current Stance of GBP/USD Pair
The chart below illustrates the currency pair’s stance amid the better-than-expected PMI reports. Meanwhile, the pair moved in a bearish tone in a short term period and rebounded in today’s session, which tried to break out on the upside.
It is likely that the most awaited scheduled reports will give a huge impact on the pair. On the other hand, the price currently moved on the green and traded higher at 1.2323 today.
Given the recoil on GBP/USD pair’s movement, we conclude that the scheduled data release could wobble the currency pair. However, we are still waiting for a supporting candle as the current price suggests market participants to wait on the sideline.
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