GBP/USD reverses early dip, flat-lined around mid-1.3000s


  • GBP/USD reversed an early dip to weekly lows following the release of UK GDP report.
  • A modest intraday USD pullback from tops provided an additional boost to the major.
  • Market participants now look forward to the US CPI report for some trading impetus.

The GBP/USD pair edged higher during the early European session and refreshed daily tops, around the 1.3067 region in the last hour, albeit lacked any strong follow-through.

Following the previous day's intraday pullback of around 90 pips and a subsequent dip to weekly lows, the pair managed to attract some dip-buying and was being supported by a combination of factors. The British pound found some support following the release of better-than-expected UK GDP report, which showed that the economy expanded by 8.7% in June as against consensus estimates pointing to a growth of 8%.

Meanwhile, the preliminary figures showed that the UK economy contracted by 20.4% in the second quarter of 2020 as compared to a 2.2% contraction recorded in the previous quarter. Two consecutive periods of contraction means that the British economy is now in a technical recession. The report, however, did little to impress bearish traders or prompt any meaningful selling around the British pound.

On the other hand, the US dollar struggled to preserve its intraday gains amid the uncertainty over the next round of the US fiscal stimulus measures. This, in turn, was seen as one of the key factors that extended some support to the GBP/USD pair. Meanwhile, hopes of a US economic recovery and some follow-through pickup in the US Treasury bond yields extended some support to the USD and capped the upside for the major.

From a technical perspective, the pair has been confined in a range over the past week or so. This further makes it prudent to wait for a sustained move in either direction and positioning for the pair's near-term trajectory. A convincing break through the key 1.3000 psychological mark will be seen as a fresh trigger for bearish traders and set the stage for an extension of the GBP/USD pair's retracement slide from multi-month tops.

Moving ahead, market participants now look forward to the release of the latest US consumer inflation figures for July. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session.

Technical levels to watch

GBP/USD

Overview
Today last price 1.3056
Today Daily Change 0.0008
Today Daily Change % 0.06
Today daily open 1.3048
 
Trends
Daily SMA20 1.2897
Daily SMA50 1.2678
Daily SMA100 1.2517
Daily SMA200 1.2711
 
Levels
Previous Daily High 1.3132
Previous Daily Low 1.3042
Previous Weekly High 1.3186
Previous Weekly Low 1.2982
Previous Monthly High 1.317
Previous Monthly Low 1.236
Daily Fibonacci 38.2% 1.3076
Daily Fibonacci 61.8% 1.3098
Daily Pivot Point S1 1.3016
Daily Pivot Point S2 1.2984
Daily Pivot Point S3 1.2925
Daily Pivot Point R1 1.3106
Daily Pivot Point R2 1.3164
Daily Pivot Point R3 1.3197

 

 

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