The GBPUSD pair has been chopping around over the last few days with no specific direction as yet. The pound has been showing a lot of resilience over the last few weeks as it has been one of the strongest performers in the market but even the pound has been hit by some dollar buying which has forced the GBPUSD pair correct from above 1.35 to trade below 1.34 over the last few days.
GBP/USD In Choppy Waters
The pair has not been able to break back through the 1.3420 region over the last couple of days despite several attempts to do the same on the back of some dollar weakness. If this pattern continues, it is likely to bring in a lot of weakness in the pound which would lead the pair lower. Also, we have a slew of data from the US later in the week and this is also likely to help to keep the dollar well bid in the short term. A combination of these events could keep the pound under pressure in the short term.
On the other hand, the pound itself has been well supported by the BOE which has kept the door open for a rate hike even during the time when the Brexit process is going ahead in full steam. The market initially believed that the BOE would not act during such an uncertain period but the last meeting of the BOE had made it clear that they would act as and when it was necessary. This has lent support to the pound which has also been buoyed by the fact that the UK government has been sending out positive signals about retaining free market access to the EU.
Looking ahead to the rest of the day, we have the manufacturing PMI data from both the UK and the US and that is likely to bring in some decent volatility. For the bulls, it is key to break through the 1.3420 region in the short term so that the uptrend can be kept intact for now.
This article was originally posted on FX Empire