GBP/USD jumps back above 1.1600 mark after Fed announced new measures
- GBP/USD retreats over 200 pips from daily tops but finds decent support near 1.1500 mark.
- The Fed’s latest move to ease liquidity weighed on the USD and helped gain some traction.
The GBP/USD pair dropped to fresh session lows, around the 1.1500 psychological mark in the last hour, albeit quickly recovered over 100 pips thereafter.
The pair failed to capitalize on its early uptick, rather met with some fresh supply on the first day of a new trading week and retreated over 200 pips from the intraday swing high to levels just above the 1.1700 round-figure mark.
The early uptick was supported by some weakness surrounding the US dollar, which was being weighed down by the US Senate’s failure to pass the COVID-19 rescue package bill and a steep decline in the US Treasury bond yields.
However, mounting fears over the economic fallout from the coronavirus pandemic continued attracting some USD dip-buying amid its status as the global reserve currency and prompted some fresh selling around the major.
Meanwhile, the latest leg of a sudden spike over the past hour or so came after the Fed announced a slew of new programs, including asset purchases in the amounts needed. The move comes amid concerns about tightening liquidity conditions and exerted some pressure on the buck.
It will now be interesting to see if the pair is able to capitalize on the momentum or the current recovery turns out to be a dead-cat bounce, which runs the risk of fizzling out rather quickly and might still be seen as a selling opportunity.
Technical levels to watch