The GBP/USD currency pair today hit new lows despite the release of positive public sector finances data by the Office for National Statistics. The pair’s decline was further precipitated by the higher buying pressure around the US dollar even as political tensions in Washington DC abate.
The currency pair lost about 100 points at the height of its decline, which started at the beginning of today’s session.
The currency pair’s bearish trend started in the Asian session and extended into the European session. This trend was not halted by the release of upbeat UK public finance data. The public sector net borrowing increased by £1.9 billion to £22.8 billion in the second quarter of 2017 as compared to the same period in 2016. A similar budget surplus was last reported in July 2002. The better-than-expected UK’s CBI industrial orders data also could not provide fresh impetus to the cable.
The stronger US dollar was the main contributor to the currency pair’s decline as the currency recovered from its two-day decline. The US Dollar Index, which tracks the greenback’s performance against its main peers, hit a high of 93.56 as compared to yesterday’s low of 93.03. The greenback’s recovery was largely triggered by higher US treasury bond yields and market expectation that Donald Trump will deliver on his campaign promises once Congress resumes.
The cable’s future performance will be affected by the speeches at the Jackson Hole Symposium scheduled for later this week, where Fed chair, Janet Yellen, is expected to speak.
The GBP/USD was trading at 1.2838 as at 13:45 GMT having declined from a high of 1.2910. The GBP/JPY was trading at 140.30 having dropped from a high of 141.04 earlier today.
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