The pound continued to move higher in a strong and steady manner despite some weak data from the UK and it continued the trend of dollar weakness that we have been seeing all across the markets. The dollar is clearly on the backfoot over the last couple of weeks or so and with the range of news that is scheduled to be released over the next few days, we are in for a big ride in the coming days.
GBPUSD Moves Still Higher
The day began with the GBPUSD pair in the low 1.25s but as the time wore on and we entered into the London session, the weakness in the dollar began to pick up momentum. Using the 1.35 region as the support, the pair continued to move higher during the London and the US sessions and it now trades near the 1.36 region and continues to look quite bullish. We have just completed the first trading day of the year and the trend so far has just been following from where it left off over the last couple of weeks.
Again, not much can be read from this as of this point and it remains to be seen whether the bulls would be able to make it stick for much longer. The move higher over the last couple of weeks had happened on low volume and yesterday was just a continuation of such a move. We continue to wait on the sidelines and see for signs on whether this move would be reversed or whether it would continue in due course of time. The next few days should be able to tell us more.
The manufacturing PMI from the UK came in weaker than expected but that seemed to have little impact on the pound. Today we have the construction PMI data from the UK but the bigger news would be the FOMC meeting minutes from December which would be released later during the US session. The market would be watching to see whether the 3 rate hikes for this year is still on the table and also look for hints on a rate hike in March. If these are hawkish, then we should see some respite for the dollar and some dollar buying.
This article was originally posted on FX Empire
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