- GBP/USD struggled to gain any meaningful traction following the release of UK macro data.
- The UK GDP growth stood at 1.8% in May, missing estimates pointing to a reading of 5%.
- The risk-off mood benefitted the safe-haven USD and kept GBP/USD bulls on the defensive.
The GBP/USD pair remained on the defensive below mid-1.2500s and had a rather muted reaction to a batch of important UK macro releases.
The pair consolidated the previous day's sharp intraday pullback of around 115 pips from the 1.2665-70 resistance zone and struggled to gain any meaningful traction through the first half of the trading action on Tuesday. Traders seemed rather unimpressed by unexpected growth in the UK manufacturing output, which jumped 8.4% in May as compared to a decline of 20.9% expected.
Meanwhile, the UK Industrial producing matched consensus estimates and rose 6% MoM during the reported month. The upbeat readings, however, were largely offset by softer-than-expected UK monthly GDP report, which showed that the economy expanded by 1.8% in May as compared to 5% rise anticipated from the coronavirus-induced slump of 20.3% in the previous month.
On the other hand, the US dollar built on the previous day's late rebound and remained well supported by the prevalent risk-off environment. The global risk sentiment took a sharp knock in the wake of renewed concerns about escalating US-China tensions and fresh coronavirus restrictions in California. The latest developments kept a lid on the recent optimism over a sharp V-shaped global economic recovery and extended some support to the greenback's relative safe-haven status.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.
Technical levels to watch
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