- Sustained USD buying prompted some fresh selling around the GBP/USD on Wednesday.
- The USD maintained its bid tone and moved little following the release of the ADP report.
- Market participants might now start repositioning for the BoE policy update on Thursday.
The GBP/USD pair maintained its offered tone post-US ADP report, albeit has managed to rebound around 25 pips from 1-1/2 week lows set earlier this Wednesday.
The pair came under some heavy selling pressure during the early European session on Wednesday and took along some short-term trading stops near the 1.2400 mark amid some strong follow-through US dollar buying.
The greenback remained well supported by its status as the global reserve currency amid concerns over the severity of the economic damage caused by the virus outbreak and seemed rather unaffected by the latest ADP report.
The monthly data published by the Automatic Data Processing (ADP) Research Institute revealed that the US private-sector employment declined by 20.236 million in April. Adding to this, the previous month’s reading was also revised lower.
The data, however, did little to provide any meaningful impetus, though the UK Prime Minister Boris Johnson’s comments seemed to have provided some respite to the GBP bulls and helped limit any further losses, at least for now.
Johnson said on Wednesday that they want to get going with some of the lockdown easing measures on Monday and further added that the details of the plan for next steps will be set out on Sunday, which extended some support to the sterling.
It will now be interesting to see if the pair is able to attract any meaningful buying interest or enters a bearish consolidation phase as the focus now shifts to the BoE monetary policy meeting, scheduled on Thursday.
Technical levels to watch