The GBPUSD pair is moving in a range and leaning on 1.3760 after rising from a low of 1.3718 earlier in the session to score a high of 1.3786 that following a reaction to the Federal Open Market Committee minutes.
The FOMC minutes had a bit for both the US dollar bulls and the bears. The minutes of the July 27-28 meeting showed that Officials felt recent inflation readings likely temporary but most they feel it could be appropriate to start tapering the asset purchases this year.
In turn, the US stock market fell towards the lows of the day, US yields and the US dollar were being pressured with the DXY moving in on the psychological 93.00 price level. Nevertheless, the US dollar has turned higher again in later trade, capping the advancement in the pound.
In a dovish take on the minutes, it was noted in the market that ”many participants noted that, when a reduction in the pace of asset purchases became appropriate, it would be important that the Committee clearly reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in the target range for the federal funds rate,” as the minutes stated.
Meanwhile, the Jackson Hole remains the US dollar’s wild card. The event will be on the 26-28 Aug where the focus will be on the Fed’s chairman Jerome Powell who is anticipated to bring more clarity to the timings of tapering.
The US dollar would be anticipated to remain to attract a bid if the covid-19 situation worsens further for such nations where the spread had been rampant or has just starting to present itself.
Furthermore, the difference between global central banks and the Fed, combined with the safe-haven status has underpinned the US dollar in the US dollar smile theory.
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