Sterling dips on COVID-19 jittters

Kenny Fisher MarketPulse

The British pound has edged lower in Tuesday trade. In the European session, GBP/USD is trading at 1.3842, down 0.27% on the day.

Dollar edges higher on Covid fears

The currency markets are in a holding pattern, as investors cast an eye to Friday, when the US releases Nonfarm Payrolls. The dollar index has managed a slight gain on Tuesday, rising 0.21% to 92.06. The British pound dropped below the 1.39 line overnight. With concerns growing over the resurgence of Covid in Europe, the UK, and Asia, risk appetite has fallen, which has pushed the US dollar slightly higher. If pandemic blues worsen, the greenback could add further gains.

On the data calendar, UK releases are limited to tier-2 events. Net Lending to Individuals is expected to rise sharply to GBP 6.9 billion in May, up sharply from 2.9 billion previously. A strong jump would point to an increase in economic activity, with consumers taking on more credit. On Wednesday, the UK releases GDP for Q1, which is expected to show contraction – the consensus is -1.5% m/m and -6.5% y/y. These second estimate readings are expected to confirm the initial estimates, which means the pound’s reaction should be muted unless the forecast is wildly off target.

In the US, consumers remain optimistic about economic conditions. The CB Consumer Confidence index is projected to accelerate in June, with a forecast of 119.0, up from 117.2 beforehand. This confirms the trend seen on Friday from UoM Consumer Sentiment, which rose in June to 85.5, up from 82.9 previously. The UoM report found that with the US recovery in full swing, close to 75% of consumers surveyed expect interest rates to rise in 2022. This was the highest proportion since 2018.

GBP/USD technical analysis

There is resistance at 1.3993, protecting the symbolic 1.40 level. Above, there is resistance at 1.4105.
On the downside, 1.3778 is the first level of support. This is followed by a monthly support line of 1.3675.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD embarks on a consolidative move around 1.1600

EUR/USD rapidly leaves behind Friday’s small downtick and trades with solid gains on Monday, consolidating its daily advance around the 1.1600 region as the NA session draws to a close. Meanwhile, the improved risk appetite following the US-Iran deal and the reopening of the Strait of Hormuz continues to weigh on the US Dollar, lending support to the broader risk-linked galaxy.

GBP/USD retreats from tops, back to 1.3420

GBP/USD keeps its advance past the 1.3400 yardstick at the beginning of the week. In the meantime, Cable continues to draw support from improved market sentiment following reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold stays firm, still below $4,400

Gold builds on its recent gains on Monday, climbing well north of the $4,300 mark per troy ounce. The yellow metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.

Ethereum Price Forecast: BitMine continues accumulation as ETH climbs above $1,800

Ethereum (ETH) treasury firm BitMine Immersion Technologies (BMNR) expanded its holdings last week, purchasing 76,881 ETH amid weakness in the crypto market. The acquisition lifted BitMine's stash of the top altcoin to 5.62 million ETH worth $10.35 billion at the time of writing. The company claims it now holds 4.66% of ETH's circulating supply, bringing it closer to its alchemy of 5% goal.

Indonesia may have stabilised the Rupiah, but the bigger fight is not over

Bank Indonesia’s emergency rate hike has bought the Rupiah some time, but the currency’s hesitant response suggests it has not yet restored confidence. Can higher interest rates solve the Rupiah’s problem, or do the country’s challenges run deeper?

4.2% headline, 0.2% core: Why the Fed's next hike may be targeting the wrong problem

May's CPI put headline inflation at 4.2% on the year, up from 3.8% in April and the hottest reading since April 2023, while core prices rose just 0.2% on the month, undershooting the 0.3% consensus and halving April's pace.