GBP/USD: On the way to 1.42 despite Brexit woes

GBP/USD extends Monday’s recovery, on the bids near intraday high.
EU’s von der Leyen rejects hopes of NI protocol changes after EU summit.
US dollar follows Treasury yields to south amid mixed chatters on inflation, tapering.
US data, Brexit headlines and unlock news can entertain traders, bond moves are the key.

Anil Panchal FXStreet

GBP/USD cheers US dollar weakness heading into Tuesday’s London open, up 0.18% intraday around 1.4180 by the press time. Alike all other major currency pairs, the cable also benefited from the downbeat US Treasury yields the previous day while also taking advantage of BOE policymakers’ optimism. In doing so, the currency pair ignores recent Brexit-negative headlines as the greenback remains pressured.

European Commission (EU) President Ursula von der Leyen remains firm on her Northern Ireland (NI) protocol commitment as all 27 members of the bloc agreed to keep the term intact after the latest EU summit, which ended on early Tuesday in Asia. “The beginnings are not easy, tensions are being felt around the access, for example, of EU fishing boats, or tensions are without any doubt there around the implementation of the protocol of Northern Ireland,” Mrs. EU’s von der Layen said as the Brexit talks are in pipeline.

The reason behind the market’s less attention to the Brexit worries could be traced from the upbeat mood of UK scientists as well as the Bank of England (BOE) policymakers. While the British doctors confirmed finding Indian strain of the covid and backed the unlock plans, BOE members including Governor Andrew Bailey hinted at tapering to justify their latest moves in Monday’s testimony.

Also positive for the GBP/USD bulls could be the preparations for the UK-India post-Brexit trade deal negotiations as well as the US dollar declines.

The US dollar index (DXY) stays pressured for the second consecutive day, down 0.07% near 89.76, as the Fedspeak flashes mixed signals over inflation and tapering. Following the comments rejecting reflation fears from Fed Governor Lael Brainard and St. Louis Fed President James Bullard, Kansas City Federal Reserve President Esther George mentioned, per Reuters, that she doesn’t dismiss the fears of an inflation surge.

Moving on, GBP/USD traders need to pay attention to the Brexit headlines and the US CB Consumer Confidence figures, not to forget second-tier US data, for fresh impulse. It should, however, be noted that a fourth negative daily performance by the US 10-year Treasury yields may keep fueling the cable prices.

Read: US Conference Board Consumer Confidence May Preview: Inflation saps consumer sentiment

Technical analysis

GBP/USD justifies Monday’s bounce off 10-day SMA, around 1.4130 by the press time. However, bulls need a clear break above 1.4200 to attack the yearly peak surrounding 1.4245.

Additional important levels

Overview
Today last price	1.4182
Today Daily Change	26 pips
Today Daily Change %	0.18%
Today daily open	1.4156

Trends
Daily SMA20	1.4029
Daily SMA50	1.3905
Daily SMA100	1.3849
Daily SMA200	1.3507

Levels
Previous Daily High	1.4172
Previous Daily Low	1.4112
Previous Weekly High	1.4234
Previous Weekly Low	1.4077
Previous Monthly High	1.4009
Previous Monthly Low	1.3669
Daily Fibonacci 38.2%	1.4149
Daily Fibonacci 61.8%	1.4135
Daily Pivot Point S1	1.4121
Daily Pivot Point S2	1.4086
Daily Pivot Point S3	1.4061
Daily Pivot Point R1	1.4181
Daily Pivot Point R2	1.4207
Daily Pivot Point R3	1.4242

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.

AUD/USD consolidates above 0.7000/two-month low; bearish potential intact

The AUD/USD pair oscillates in a narrow range during the Asian session, and moves little following the release of mixed inflation figures from China. Spot prices currently trade around the 0.7025 region, nearly unchanged for the day, and remain within striking distance of a nearly two-month low set on Tuesday. Renewed hostilities between the US and Iran temper hopes for a deal to end the over three-month-old war.

Japanese Yen languishes despite wholesale inflation accelerates in May

USD/JPY flatlines after experiencing volatility, trading around 160.40 during the Asian hours on Wednesday. The pair continues to hold its ground, reflecting a struggling Japanese Yen that has failed to find support despite a massive acceleration in wholesale inflation. Driven by surging energy costs linked to the ongoing Middle East conflict, Japan’s Producer Price Index jumped 6.3% year-over-year in May. This hot printing comfortably outpaced April’s upwardly revised 5.3% figure and surpassed market consensus of 5.5%, marking the fastest pace of wholesale price growth in three years.

Gold languishes near March low, below $4,200 as traders await US CPI report

Gold maintains its heavily offered tone through the first half of the European session and currently trades near its lowest level since March 23, around the $4,180-$4,175 region. Renewed hostilities between the US and Iran fuel inflationary concerns and bolster bets for more hawkish central banks, driving flows away from the non-yielding yellow metal. The decline could also be attributed to technical selling following the recent breakdown below the very important 200-day SMA and seems unaffected by a softer US Dollar, which tends to benefit the commodity.

Cardano's downtrend deepens despite on-chain bottoming signals

Cardano edges lower to $0.1600 signaling a potential extension of the 30% loss from last week. The altcoin remains under intense selling pressure, weighing on its retail support. Still, a spike in dormant supply re-entering circulation signals that the selling pressure has run its course, a pattern that often precedes a rebound.

US CPI data set to show inflation at three-year high in May, backing Fed hawkish tilt

The US Bureau of Labor Statistics will publish the May Consumer Price Index (CPI) data on Wednesday. The report is expected to show another step up in consumer inflation, driven by the persistently high Oil prices due to the ongoing crisis in the Middle East.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.