- GBP/USD has struggled to take advantage of dollar weakness amid a slew of British issues.
- Sino-American tensions, Brexit speculation, and end of month flows are all in play.
- Friday's four-hour chart is showing the currency pair's failure to crack critical resistance.
And then there were six – from Monday, relaxed restrictions will allow groups of six people to meet in England. However, this gradual reopening is of no solace to the pound, which is losing ground against the dollar, yen, and euro.
Brexit uncertainty looms over sterling – no news is bad news in this case. The UK's refusal to extend the transition period beyond year-end – with no deal on future relations in sight – raises the risk of falling back to World Trade Organization rules in 2021.
Another factor, albeit of diminishing impact, is the prospect of negative rates in the UK. Both Andrew Bailey, Governor of the Bank of England, and Andy Haldane, Chief Economist at the bank, kept the door open to setting sub-zero borrowing costs but hinted it is not imminent.
One downer that may be fading away is the political scandal around Dominic Cummings, the powerful adviser of Prime Minister Boris Johnson. It seems that MPs and the media are finally fading away, at least for now.
In broader markets, tensions between the US and China have intensified, as Washington pledged to respond to China's security law, tightening Beijing's hold on Hong Kong. The Asian financial hub may lose some preferential tariffs and the US may take further steps.
China's statement about aiming for a "peaceful reunification" with Taiwan also sent chills. President Donald Trump is set to lay out steps in a speech later in the day. While stock markets are on the back foot, the US dollar seems to have relinquished its safe-haven status, for now, allowing only the yen to advance.
The US economic calendar is packed with publications. Personal Income, Personal Spending, and Core Personal Consumption Expenditure (Core PCE) are all eyed.
Core PCE, Personal Spending and Income Preview: The fall of records, where the wage earner leads, the consumer is sure to follow
It is essential to note that Friday is the last day of the month, and may see some last-minute moves ahead of the close. Uncertainty about Trump's speech may add to volatility.
GBP/USD Technical Analysis
While cable has set higher lows and benefits from upside momentum, its failure to conquer the 1.2360 level for the third time in recent days may not bode well. That level also converges with downtrend resistance and also the 200 Simple Moving Average.
Some support awaits at 1.2240, which has been separating ranges in recent days. It is followed by 1.2210, a low point early in the week. The next level to watch is 1.2160.
Resistance beyond 1.2360 is only at 1.2470, followed by 1.2510.
More Looking toward the recovery: currency drivers and what to watch out for
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 after German inflation data
EUR/USD trades modestly higher on the day above 1.0700. The data from Germany showed that the annual HICP inflation edged higher to 2.4% in April. This reading came in above the market expectation of 2.3% and helped the Euro hold its ground.
USD/JPY recovers above 156.00 following suspected intervention
USD/JPY recovers ground and trades above 156.00 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.