The GBPUSD pair is now trading in the 1.32 in what can be seen as a well deserved bounce after it had been knocked down over the last couple of weeks due to economic and political issues in the UK dominating the headlines. The pound had been falling all across the board during this period and it would have been a relief for the bulls as this bounce provides them with an opportunity to get out of their longs.
GBPUSD in Relief Rally
The reason why we say this is that we believe that the short term pressure on the pound is still not completed and the pound is not yet out of the woods. We believe that what we are seeing now is just a relief rally after the hit that the pound has been suffering over the last few weeks and the traders need to try and enjoy it as long as it lasts, The domestic troubles for the UK PM May continue to persist while the incoming data continues to be choppy and this has led to lack of confidence in the UK economy.
Since the beginning of the week, the pound has been able to find some sort of a relief as the dollar continues to suffer from the weak NFP that we saw last week. The market had been expecting some strong data which would reinforce its belief of a rate hike from the Fed in December but the lack of strong data to support that has led to uncertainty on whether the Fed would have enough ammunition to do so.
It is in this context that the minutes from the FOMC that would be released today, would be very crucial and would get a lot of attention from the markets. It would tell the markets on what the Fed members think about the next rate hike and whether they continue to believe that a rate hike is possible in December. Brace yourself for a lot of volatility in the GBPUSD pair tonight.
This article was originally posted on FX Empire