GBP/USD remains sidelined below 1.3900 amid coronavirus woes
- GBP/USD stays subdued, recovery moves capped around monthly top.
- UK retailers report record Q2 growth, NI unionists convey dislike over post-Brexit trade barriers.
- UK PM Johnson pushes for caution even as activity restrictions will be removed on July 19.
- Covid updates, US CPI become the key catalysts.
GBP/USD fades late Monday’s bounce off 1.3839 around 1.3880 during the initial Asian session on Tuesday. In doing so, the cable pair struggles for clear direction as bulls as bears jostle over mixed clues. While upbeat UK retail sales and hopes of unlock back the buyers, PM Boris Johnson’s cautious comments and Brexit woes tease the pair sellers of late.
As per the latest British Retail Consortium (BRC) data, per Reuters, sales in the second quarter of 2021 were 28.4% higher than a year earlier and 10.4% higher than two years before. The news also mentioned that the year-on-year increase was the largest since the BRC's records began in 1995. Additionally, UK’s Barclaycard says, “Spending at pubs and bars rose by most since September 2020 due to warm weather and sporting events,” per Reuters.
Alternatively, the coronavirus concerns are becoming grim of late even as the policymakers stay intact on July 19 unlock deadline. Recently, UK PM Johnson said that life cannot go back to normal after restrictions are lifted. The fears of witnessing 100,000 cases in summers have been testing the optimists of late.
Also negative for GBP/USD traders was the July 12 parade by hundreds of Northern Ireland (NI) Orange Order members. “This year's Twelfth of July parades were smaller than usual and locally based due to Covid-19 concerns. Orangemen also protested about post-Brexit trade arrangements and burned Irish tricolor on bonfires,” said the UK’s Daily Mail.
Elsewhere, a light calendar keeps markets sluggish as the coronavirus (COVID-19) woes test the market optimism at the end of Q2 2021.
Against this backdrop, Wall Street benchmarks refreshed record top on Monday but S&P 500 Futures print mild losses by the press time.
Moving on, US Consumer Price Index (CPI) for June will be the key ahead of Fed Chair Jerome Powell’s Testimony. Above all, covid concerns are important to watch.
Read: US Consumer Price Index June Preview: Has inflation peaked?
Technical analysis
Failures to provide a decisive break beyond 100-day EMA, around 1.3895, keep GBP/USD sellers directed towards the monthly low of 1.3731.
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.
