The GBPUSD pair moved lower during the course of trading yesterday as the dollar managed to regain back some of its strength during the last 24 hours. The dollar was supported by the incoming data and also by the FOMC meeting minutes which was released late in the day. This helped the pair to correct back down after having risen over the last couple of weeks.
GBPUSD Corrects Lower
The pair had been trading just above the 1.36 region to begin the day yesterday but as the day wore on, the dollar gained in strength and the pair corrected back lower and it now trades just above the 1.35 region as of this writing. We have been mentioning in many of our forecasts over the last few days that the move higher that we had seen over the last couple of weeks had happened on low volume and that there was always the risk that the move could be reversed at any point of time even at the slightest hint of dollar strength.
Yesterday, the manufacturing PMI data from the US came in stronger than expected while the construction PMI data from the UK was weaker. This set the pound on the backfoot and even before the release of the FOMC minutes, the fall in the pair had begun to take root. This became more profound after the release of the minutes as the minutes showed that many of the members continued to favor gradual rate hikes which favored the dollar bulls. This helped the dollar to move higher against the pound even though there was nothing new in the minutes.
Looking ahead to the rest of the day, we have the services PMI data from the UK and after the set of weak data from the UK over the past couple of days, another piece of weak data could only add even more pressure on the pound. The ADP employment report, it if comes stronger, is expected to add strength to the dollar which could then lead to an even bigger reversal, especially if the support region around 1.35 is broken through.