GBP/USD: Mildly bid around 1.3100 ahead of UK Jobs report
- GBP/USD keeps gains from 1.3065 despite the latest pullback from 1.3096.
- UK Consumer Spending recovers in July, London-Tokyo trade talks linger.
- No10 vows action on illegal French fishers, BOE’s Ramsden signal further QE if the economy worsens
- US dollar fades upside momentum, market sentiment stays positive despite risk-negative headlines.
GBP/USD picks up the bids near 1.3090, up 0.11% on a day, while heading into the London open on Tuesday. The Cable extends Monday’s winning streak despite downbeat comments from the BOE policymaker as well as Brexit woes. The reason could be spotted from the US dollar’s pullback after rising for two consecutive days. Though, the traders remain cautious ahead of the key UK employment numbers for July that may please the pair buyers.
Early in Asia, the Bank of England (BOE) Deputy Governor Dave Ramsden showed readiness on the part of the “Old Lady” to escalate the Quantitative Easing (QE) if the economy falters again. The BOE recently raised its economic forecasts during last Thursday's monetary policy meeting but struck a cautious tone.
Also on the negative side is the Daily Express news suggesting the UK government has vowed to take action against illegal French fishermen at the conclusion of the EU transition period. The same worsens odds of a good Brexit at a time when the talks are struggling for a pace. On the other hand, the UK-Japan trade negotiations also stuck on Monday whereas British PM Boris Johnson’s readiness to recall the lockdown flashed red signals for the coronavirus (COVID-19) watchers.
It should also be noted that Reuters relied on the data from Barclaycard and the British Retail Consortium to convey that British consumers spent the most last month since the country went into a coronavirus lockdown in March, as pubs, restaurants, barbers and beauty salons reopened.
Alternatively, US President Donald Trump’s executive orders pushed China to retaliate by sanctioning 11 American diplomats. However, the positive impacts, concerning the increased odds a stimulus, were majorly followed.
Against this backdrop, the S&P 500 Futures and stocks in Asia-Pacific flash gains whereas the US 10-year Treasury yields rise one basis point to 0.584% by the press time. The same cool down the US dollar index (DXY) that grew during the last two days.
Looking forward, the UK employment data will be the key for the GBP/USD pair traders as bulls will analyze the clues of the recent economic restart and stimulus to foresee near-term moves of the pair. Forecasts suggest the headline Unemployment Rate rise to 4.2% from 3.9% and join the downbeat comments from the BOE policymaker’s to challenge the latest upside moves.
Read: UK Jobs Preview: Feeble figures still furloughed? Another robust report may boost BOE-fueled rally
Following the UK data, risk catalysts will be in the spotlight amid a light calendar.l
Technical analysis
While overbought RSI conditions could be spotted for the pair’s inability to rise, 10-day EMA and an ascending trend line from April 14, respectively near 1.3035 and 1.3000, offer strong downside support to challenge the sellers. Even so, buyers are likely to remain cautious unless successfully breaking 1.3200 mark comprising March month high.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
