GBP/USD snaps three-day losing streak ahead of UK Services PMI
|- GBP/USD bulls cheer pullback from 1.2980 to attack 1.3100.
- Broad US dollar weakness, hopes of further stimulus from the UK underpins the Cable.
- Fears of the bigger second wave of virus, challenge buyers ahead of the BOE.
- US data, talks over stimulus will be the key catalysts.
GBP/USD takes the bids near 1.3090, up 0.12% on a day, while heading into the London open on Wednesday. The Cable cheers US dollar’s decline and signals that UK Chancellor Rishi Sunak is up for further stimulus to defy the previous three-day downside. Even so, the pair buyers remain cautious ahead of the UK Services PMI as well as the key data from America.
Earlier in Asia, The Telegraph came out with the news suggesting further relief from the British Chancellor Sunak. The UK diplomat is considering an increase in business rates. “Currently, the levy is not charged on the first £125,000 of the property selling price, with a 2 percent rate up to £250,000 and 5 percent on the next £675,000,” the news said. Additionally, the BBC also said that an £800m fund to prepare the Welsh National Health Services (NHS) for a possible second coronavirus (COVID-19) wave has been announced by ministers. The news includes fears of the larger wave as British schools are about to open.
It should also be noted that the European Union’s (EU) hint to scale back some of the demands and the UK’s good progress on the trade talks with the US and Japan also favor the pair.
On the other hand, the US policymakers failed to agree over the much-awaited stimulus and keep weighing on the US dollar index (DXY). The greenback gauge drops 0.12% to 93.13 by the press time. In doing so, the USD ignores upbeat figures of the American Factory Orders as well as hints that the Sino-American trade talks will resume this month.
The risk-tone remains sluggish with Asia-Pacific shares printing mild losses and the S&P 500 Futures rising 0.06% to pierce 3,300 as we write.
Although risk catalysts are likely to keep the driver’s seat, the second reading of the UK Services PMI for July, expected to confirm 56.6 initial forecast, will offer immediate clues to the pair. Following that, the US ISM Non-Manufacturing PMI and ADP Employment Change will be closely observed to gauge Friday’s employment data.
Technical analysis
Unless witnessing a clear break below 1.2975 comprising 10-day EMA and a four-month-old support line, bulls can keep attacking 1.3200 round-figures.
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