- GBP/USD pokes resistance line of immediate trading range during three-day uptrend.
- UK PM Johnson’s optimism over unlock, Germany’s favor for travelers back the bulls.
- Upbeat UK Services PMI, inactive markets offer also back the recovery.
- US PMIs, full markets’ reaction to the latest covid fears will be important for fresh impulse.
GBP/USD rises for the third consecutive day, recently picking up bids inside a 20-pips trading range to 1.3860, amid the early Asian session on Tuesday. In doing so, the cable justifies the latest coronavirus (COVID-19)-led activity restriction related news as well as the market’s risk-on mood.
Following UK PM Boris Johnson’s hawkish stint, backing no limits beyond July 19, Germany also welcomed British travelers, in addition to those from India, Russia and Portugal, in an attempt to ease the covid woes.
UK PM Johnson’s latest moves raise doubts among the investor fraternity amid the increase in Delta covid strain infections. On the contrary, the German move was widely anticipated after Chancellor Angela Merkel’s UK visit on Friday.
It’s worth noting that an uptick in the final reading of the UK’s June month Services PMI, +0.4% versus 0.1% initial forecast, also favored GBP/USD prices. Additionally, the market’s risk-on mood, mainly backed by receding odds of the Fed’s action following Friday’s mixed US jobs report, offered an extra fuel to the pair prices.
On the contrary, fears of the new covid strain, known as Epsilon, recently probed the optimists as it shows vaccine resistance. Further, the EU-UK jitters over Brexit also challenge GBP/USD bulls. Recently, Irish policymakers criticize the British approach over the Northern Ireland (NI) protocol.
Amid these plays, S&P 500 Futures print 0.10% intraday gains by the press time, near the record top flashed last week.
Looking forward, GBP/USD traders will keep their eyes on the full markets’ reaction to the latest catalysts as the US bourses open after a long weekend. Also important will be the US ISM Services PMI for June, expected 63.5 versus 64.00 prior.
Read: ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound
Technical analysis
Sustained break of a three-week-old falling trend line directs GBP/USD bulls toward the 100-DMA level near 1.3950. However, any further upside will be tested by the late June swing high surrounding the 1.4000 psychological magnet. On the contrary, June 21 low near 1.3785 may offer an additional filter to the south, other than the resistance-turned-support line near 1.3810, before directing bears to the monthly low around 1.3730.
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