The GBP/USD pair has lost its traction after having failed to clear 1.1750 resistance on Tuesday and ended up closing the third straight day in negative territory. Although the pair stays relatively quiet on Wednesday, the near-term outlook suggests that the pair could suffer additional losses.
The risk-positive market environment helped GBP/USD push higher during the European trading hours on Tuesday. With upbeat macroeconomic data releases from the US allowing hawkish Fed bets to continue to dominate the market action, the dollar gathered strength and forced the pair to reverse its direction.
Additionally, Wall Street’s main indexes turned south following a positive opening and helped the USD stay resilient against its rivals.
Early Wednesday, markets remain risk-averse with the UK’s FTSE 100 Index losing 0.4% in the early European session. Meanwhile, US stock index futures, which were up more than 0.5% earlier in the day, started to erase earlier gains, confirming the negative shift in risk mood.
Later in the session, the ADP will release the private sector employment data for August. The ADP announced in June that it suspended the release of employment data while revamping the methodology. Investors are likely to approach the data cautiously ahead of Friday’s Nonfarm Payrolls report. Hence, the risk perception could continue to dominate the markets in the second half of the day.