U.S. Dollar Rebounds After 4-Day Decline, Cable Drops
The U.S. dollar bounced on Thursday from a nearly-two-week low after four-straight days of losses, as a weaker pound helped support the greenback’s recovery against major rivals.
At 10:48 AM ET (14:48 GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.25% to 96.75. The index hit 96.35 a day earlier, its lowest level since March 4, after U.S. data on producer prices backed the Federal Reserve’s wait-and-see approach on interest rates in the face of muted inflation pressures.
Sterling weakness lent a hand to dollar strength as markets took a pause amid Brexit developments. The U.K. parliament rejected the possibility of exiting the European Union without a deal, but there's an upcoming vote later in the day.
Although the British parliament is widely expected to approve a request for an extension of the March 29 deadline, it would still require EU approval.
“Hence, the pound's appreciation yesterday is still set on shaky and not on firm foundation,” analysts from DBS explained in a note.
GBP/USD fell 0.73% to 1.3238 by 10:49 AM ET (14:49 GMT).
The euro also lost momentum after four days of gains against the greenback.
“Looking ahead, EUR/USD could resume the ascent should dollar demand remain subdued. However, it looks like that at this stage, the pair is preparing for a bearish correction that could take place before the end of this week,” Capital Markets senior analyst Helen Rush said.
Rush indicated that a clear break above the 1.1340 technical resistance would be necessary to confirm a further rally.