has turned south and declined below 1.2100 early Wednesday after having registered strong gains on Tuesday. The near-term technical outlook points to a loss of bullish momentum and buyers could remain on the sidelines unless the pair manages to reclaim 1.2100.
The upbeat PMI data from the UK revived hawkish Bank of England (BOE) bets and provided a boost to Pound Sterling during the European trading hours on Tuesday. According to Reuters, money markets are currently seeing a 70% probability of the BOE raising its policy rate to 4.75% this summer, compared to 40% before last week’s soft UK inflation data.
In the second half of the day, however, unexpectedly strong PMI data from the US triggered a leg higher in the US Treasury bond yields and helped the US Dollar (USD) hold its ground. In turn, GBP/USD has struggled to extend its rally.
Early Wednesday, the risk-averse market atmosphere is allowing the USD to stay resilient against its peers and forces GBP/USD to stay on the back foot.