The GBPUSD pair was under a lot of pressure during most part of the day yesterday, probably due to the fact that it was the last day of the month and we were seeing a lot of month end currency flows. We had mentioned that we see a lot of strength in the pound and that we see a lot of potential in this pair in the short term and further proof of that came in the form of a recovery late yesterday.
GBPUSD Stages Smart Recovery
After being under lot of pressure and being pushed towards the 1.2850 mark for most part of the day yesterday, the GBPUSD pair staged a smart recovery very much late in the day. This recovery did not happen on any specific fundamental news but was based more on the underlying strength in the pound and a bout of weakness in the dollar. This helped the pair to recover and end the day almost unchanged and we now see the pair threatening to break through 1.2950 as of this writing.
Today is likely to be an important and volatile day for the pair as we have the manufacturing PMI data from the UK and the employment data from the US. The incoming data from the UK of late has been very choppy which has raised doubts on whether the UK is beginning to suffer from the effects of the Brexit process. It has not shown any major signs of weakness as yet and so the data is likely to be closely watched for any such indications.
As far the employment report from the US today, it assumes added significance due to the strong ADP and GDP data from the US that came in on Wednesday and indicated that the US economy could be getting stronger and raising hopes for a quick rate hike from the Fed.. The NFP and wages data from today would need to be strong to keep up the dollar positivity and recovery while a failure in the data could push the GBPUSD pair towards the 1.3030 region.
This article was originally posted on FX Empire