GBP/USD dives below 1.2200 despite disappoing US Consumer confidence
|- The British pound is losing 0.63% in the week.
- Soft US Consumer Confidence dropping to 20-year lows, augmented appetite for the buck.
- The GBP/USD falls due to a stronger buck, and weak US economic data.
The British pound extends its losses to two consecutive days, trading below the 1.2200 figure, after printing a daily high shy of the 1.2300 mark and stumbling towards the 1.2190s area in the North American session. At the time of writing, the GBP/USD is trading at 1.2189.
The GBP/USD fell due to a stronger buck, and weak US data
Sentiment shifted sour after a disappointing US Consumer Confidence reading dropped to a decade low, to 98.7 from a 103.2 downward revision in May. US equities tumbled on the headline, which sparked a counter-cyclical move in the greenback, rising instead of falling, and advanced back above the 104.000 mark, as shown by the US Dollar Index.
At the same time, further US economic data was unveiled led by the Richmond Fed’s Manufacturing Index fell below the expectations, shrinking from -19.0 vs. -12.0 foreseen, while the Dallas Fed Services Index contracted.
The GBP/USD reacted negatively and had the same fate as US equities, tumbling below June’s 27 low at 1.2238, exacerbating the downward move later, through the 1.2200 figure, registering a fresh weekly low at 1.2180.
Elsewhere, more Fed policymakers hit the media. The San Francisco Fed President Mary Daly commented that the Fed could address inflation, which according to her, is “half of the cause of inflation,” and said that the US would have slower growth.
Earlier, the New York Fed President John Williams said that officials would discuss whether to hike 50 or 75 bps the Federal funds rate in the next month on Tuesday. Williams added that policymakers would be data-dependent and does not foresee a recession in his baseline, though he acknowledged the US economy might slow down.
Regarding growth, the Fed’s Atlanta GDPNow, a forecast of the US GDP, rose from 0% to 0.3% on its last update, June 27.
Concerning the UK economic docket, the house of commons approved the North Ireland Protocol bill, which would allow the UK to scrap the Brexit deal, which would trigger a trading war with the EU, and weighed on the GBP/USD.
The US Dollar Index, a gauge of the buck’s value against six currencies, underpinned by the rise in the US 10-year yield up by four bps at 3.234%, advances firmly above the 104.000 thresholds, at around 104.560, gaining 0.62%.
The US economic docket will feature the Fed Chair Jerome Powell on Wednesday at an event organized by the European Central Bank.
GBP/USD Key Technical Levels
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