GBP/USD Retraces Earlier Gains as the US Dollar Index Surges

The GBP/USD currency pair today retraced some of its earlier gains made during the European session in the North American session as the US Dollar Index rallied higher. The currency pair had rallied higher during the mid-European session after the release of UK CBI trends data, which beat expectations.

The GBP/USD currency pair rallied to a daily high of 1.3267 early in the European session before trending lower to hit a daily low of 1.3209, then later rallied higher on the CBI trends data before heading lower as the DXY recovered.

The currency pair’s initial rally was negated by the conflicting testimonies being submitted by the Bank of England‘s three Monetary Policy Committee members before the Treasury Select Committee. The release of the UK public sector finances report for October by the Office for National Statistics had minimal impact on the pair’s decline. The public sector net borrowing (excluding public sector banks) increased by £0.5 billion to £8.0 billion in October 2017, compared with October 2016.

The brief recovery in the DXY in the early American session is what precipitated the pair’s latest decline. This recovery was supported by the better-than-expected US existing home sales data as well as the higher Chicago Fed National Activity Index. However, the DXY could not break above its daily high of 94.17 as it was trading slightly below the 94.00 handle.

The currency pair’s future performance is likely to be affected by tomorrows UK budget presentation and a slew of US data including the jobless claims report.

The GBP/USD currency pair was trading at 1.3229 as at 17:01 GMT having declined from a daily high of 1.3267 set earlier today. The GBP/JPY currency pair was trading at 148.76 having dropped from a daily high of 149.37.

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