- GBP/USD snaps two-day uptrend, eases from weekly top.
- Ireland’s DUP leader threatens to overrule border checks if PM signs NI protocol.
- British covid cases ease but death toll stays firmer, return of lockdown feared.
- UK Consumer confidence jumps to pre-covid era, Retail Sales, PMI will be the key recall bulls.
GBP/USD bottoms out from intraday low surrounding 1.3750 to 1.3764, mostly unchanged ahead of Friday’s London open. In doing so, the cable pair struggles to extend the two-day rebound as Brexit jitters join the covid woes to tame the bulls. Even so, cautious optimism in the markets, coupled with upbeat UK fundamentals, seem to keep the bulls hopeful ahead of UK Retail Sales and preliminary readings of July PMIs.
Ireland’s Democratic Unionist Party (DUP) Leader Sir Jeffrey Donaldson conveyed its strong rejection of the Brexit deal and cost that the Northern Ireland needs to bear, due to the border checks over British goods entering the region. The recently elected head of the largest unionist party in Northern Ireland warned yesterday, per The Times, “Northern Ireland ministers will unilaterally suspend checks on goods crossing into the province from Britain if the prime minister signs up to an ‘unacceptable’ new Brexit deal.”
On Thursday, European Commission President Ursula von der Leyen turned down UK PM Boris Johnson’s other push to alter Northern Ireland (NI) protocol by tweeting, “we will not renegotiate” term.
Elsewhere, UK PM Johnson has backed an emergency plan to avoid disruption of UK food supplies caused by Covid-related staff shortages, per the Financial Times (FT). Not only the food shortage but the warning of another lockdown by the British scientists and a steady rise in the death toll, recently to 83, also weighs on the GBP/USD prices.
Alternatively, S&P 500 Futures remains mildly bid as optimism over US President Joe Biden’s infrastructure spending plan and US debt limit keeps the pair buyers hopeful. Additionally, a recovery in the GfK Consumer Confidence for July to pre-pandemic levels also restricts the GBP/USD pair’s downside.
Looking forward, the UK Retail Sales for June, expected to reverse -1.4% MoM print with +0.4%, will precede July’s Manufacturing and Services PMI, bearing respective forecasts of 62.5 and 62.0 versus 63.9 and 62.4 in that order, will direct immediate GBP/USD moves. Following that, the US PMIs will be the key as the Sterling traders will seek confirmation of the covid woes and may react positively to welcome surprises.
Read: US Markit PMIs Preview: Pre-weekend dollar boost? Downbeat figures could exacerbate risk-off mood
Technical analysis
GBP/USD recovery moves from 61.8% Fibonacci retracement (Fibo.) of December 2020 to June 2021 upside manages to cross the key SMA and 50% Fibo. hurdle, keeping the buyers hopeful. Also favoring the bulls is the MACD line that teases a bullish breakout over the signal line.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.