GBP/USD retreated from recent trend highs as markets paused before an update on Fed thinking in the minutes release later on Wednesday, giving investors a chance to consider their next assault on the dollar after a blistering selloff.
Recent bullish GBP/USD momentum is likely to resume as the Fed is expected to affirm its lower-for-longer view, evidenced by the flat front end of the U.S. yield curve 0#FF:, 0#ED:, likely noting the need for fiscal stimulus amid significant domestic and international economic uncertainty related to the COVID-19 pandemic.
Cable opened U.S. trade at 1.3224 and retreated down to 1.3203 by mid-morning.
GBP/USD's stop-loss fueled rise above recent resistance in the 1.3185-1.3210 area, coming on the heels of significant backing and filling between 1.2982 and 1.3186 in August, which likely cleared out weak GBP/USD shorts, sets the stage for further gains toward its Dec. 13 post-UK-election rise to 1.3516.
GBP IMM positioning is hovering near flat 1096742NNET which provides a clear path for sterling bulls to get long while the U.S. works toward its recovery.
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