• A combination of factors dragged GBP/USD lower for the second successive session.
  • Worries that job losses will rise after the furlough scheme ends weighed on the GBP.
  • The risk-on impulse benefitted the safe-haven USD and contributed to the selling bias.
  • The USD bulls seemed rather unaffected by the disappointing US Retail Sales figures.

The GBP/USD pair remained depressed below the 1.3800 mark, or multi-week lows and failed to gain any respite from disappointing US macro data.

The pair extended the previous day's rejection slide from the 1.3875-80 supply zone and witnessed some follow-through selling for the second successive session on Tuesday. The British pound was being pressured by worries that job losses will rise after the furlough scheme ends in September. This, along with disappointment from the UK Claimant Count Change, overshadowed an unexpected fall in Britain's unemployment rate and stronger wage growth data.

On the other hand, the risk-off impulse in the market drove some haven flows towards the US dollar, which was seen as another factor that exerted downward pressure on the GBP/USD pair. Investors remain worried that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery. The concerns were further fueled by weaker US Retail Sales data, which weighed on investors' sentiment and benefitted the traditional safe-haven currencies.

In fact, the headline sales missed consensus estimates by a big margin and declined sharply by 1.1% in July. Adding to this, core retail sales (excluding autos) fell 0.4% during the reported month as against market expectations for a modest 0.1% growth. The data reaffirmed that the US consumer has grown more cautious in response to the latest surge in COVID-19 cases.

This might have forced investors to further scale back their expectations about an early policy tightening by the Fed, which was evident from the continuous decline in the US Treasury bond yields. The USD bulls, however, seemed rather unaffected by the developments, instead took cues from a generally weaker trading sentiment around the equity markets.

The market focus now shifts to Fed Chair Jerome Powell's scheduled speech, which will be closely scrutinized for some clues about the next policy move. This, along with Wednesday's release of the FOMC monetary policy meeting minutes, will influence the near-term USD price dynamics and provide a fresh directional impetus to the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.3788
Today Daily Change -0.0056
Today Daily Change % -0.40
Today daily open 1.3844
 
Trends
Daily SMA20 1.3844
Daily SMA50 1.3882
Daily SMA100 1.3928
Daily SMA200 1.3782
 
Levels
Previous Daily High 1.3879
Previous Daily Low 1.3828
Previous Weekly High 1.3894
Previous Weekly Low 1.3791
Previous Monthly High 1.3984
Previous Monthly Low 1.3572
Daily Fibonacci 38.2% 1.3847
Daily Fibonacci 61.8% 1.3859
Daily Pivot Point S1 1.3822
Daily Pivot Point S2 1.38
Daily Pivot Point S3 1.3771
Daily Pivot Point R1 1.3873
Daily Pivot Point R2 1.3901
Daily Pivot Point R3 1.3924

 

 

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