GBP/USD remains poised to extend loss below 1.3800 ahead of US, UK PMI data
- GBP/USD accumulates heavy losses since the beginning of June.
- US dollar touches a multi-week high above 92.40 on upbeat economic data and risk-aversion.
- The sterling is under stress amid growth and political uncertainties.
The strong buying pressure in the US dollar keeps GBP/USD gains under check. The pair continues to subside following a combination of factors.
At the time of writing, GBP/USD trades at 1.3816, down 0.08% for the day.
The appreciative move in the greenback, which trades near the 12-week high at 92.42 contributes to the downside in the pair. Investors turned to safe haven assets amid rising coronavirus infections due to the highly contagious Delta variant globally.
The Upbeat economic data also enhances the USD valuations. The Private Business in the US added 692K jobs in June, above the market expectations of 600K. The Pending Home sales data rose 13.1% in May on YoY basis, after surging by a record 51.7% in April.
Meanwhile, the hawkish comments from the Fed’s official fuel the expectations of higher interest rates sooner than expected. Richmond Fed President Thomas Barkin said that the central bank has made “ substantial further progress” towards its inflation goal to begin tapering talks.
On the other hand, the sterling is struggling with the double whammy of growth and political uncertainties. The surging coronavirus infections in the UK shaken the economic outlook, although the economy is set to open by July 19.
The UK Gross Domestic Product shrank by 6.1% in Q1 on a YoY basis, as demand and economic activity fell due to the tightening of COVID-19 restrictions. The Business sentiment fell 10.7% in Q1, below the market expectations of 11.9%
EU-UK political tussle due to Brexit remained a pain for the sterling performance. In the latest development, the UK now expects to reach an agreement with the EU on extending the grace period for the post-Brexit trading agreement in Northern Ireland.
As for now, investors await the UK Markit/CIPS Manufacturing Purchase Manager Index (PMI), US Initial Jobless Claims, Markit Manufacturing PMI, ISM Manufacturing PMI, and Construction Spending data to gauge the market sentiment.
GBP/USD additional levels
Author
Rekha Chauhan
Independent Analyst
Rekha Chauhan has been working as a content writer and research analyst in the forex and equity market domain for over two years.
