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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
NZD/USD hits fresh seven-week lows below 0.6100 after RBNZ's expected 50 bps rate cut
NZD/USD hits fresh seven-week lows near 0.6100 after the Reserve Bank of New Zealand (RBNZ) announced on Wednesday that it lowered the Official Cash Rate (OCR) by 50 basis points (bps) from 5.25% to 4.75%, leaving the door ajar for further rate cuts.
AUD/USD bounces to 0.6750 amid risk-on mood
AUD/USD is off three-week lows, trading near 0.6750 in Wednesday's Asian trading. The pair takes advantage of the risk-on mood and a pause in the US Dollar advance, as traders turn their attention to the Chinese stimulus prospects and the Fed Minutes for fresh trading impetus.
Gold price struggles to lure buyers amid smaller Fed rate cut bets
Gold price struggles to capitalize on the previous day's modest bounce from the vicinity of the $2,600 mark, during the Asian session on Wednesday. Traders have been scaling back their expectations for a more aggressive policy easing by the Fed, which continues to act as a tailwind for the USD and caps the upside for the non-yielding yellow metal.
Rising treasury yields attract Dollar interest
The Dollar Index has been on an upward trajectory since late September. Still, the currency market has been late in joining the move in US long-term bonds, where yields are rising following the Federal Reserve's decisive easing.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.