GBP/USD quickly erodes 50-pips, turns south towards 1.3800

GBP/USD runs into fresh supply into the London fix on Friday, quickly giving away nearly 50-pips to turn back towards the 1.3800 level.

The cable, however, witnessed a stellar recovery from multi-day troughs of 1.3741, although fell short of the 1.3900 barrier before the sellers fought back control.  

The 115-pips rebound in the cable came on the back of a sharp turnaround in the risk sentiment, as global stocks rallied and dulled the US dollar’s appeal as a safe haven.

Investors seem to shrug off the latest concerns over the Delta covid variant and its impact on the global economic recovery, as bargain hunting seems to have resurfaced after Thursday’s sell-off across the board.

Meanwhile, renewed Brexit concerns, surging covid cases in the UK and downbeat GDP also fail to have any impact on the pound, as the risk-on flows remain the main market driver.

The Financial Times (FT) reported early Friday, “Brussels and London were on Thursday locked in a dispute over the size of the UK’s Brexit bill, after the EU suggested that Britain would be obliged to pay €47.5bn (£40.8bn) as part of its post-Brexit arrangements.” 

On the covid updates, the UK saw a jump of 32,551 new infections on Thursday, which could threaten PM Boris Johnson’s reopening plans.

Investors also paid a little heed to the disappointing UK statistics, as the GDP missed estimates with 0.8% in May while Britain’s Manufacturing Production dropped unexpectedly by 0.1% MoM in the reported month.

GBP/USD: Technical levels