- GBP/USD stays defensive after pushing back Cable bears the previous day.
- Softer US data fails to impress Pound Sterling bulls amid mixed concerns about BoE.
- UK’s higher inflation clues jostle with British growth fears to prod GBP/USD bulls.
- Absence of Fed talks, major UK data adds strength to cable pair’s sluggish move.
GBP/USD struggles for clear directions around 1.2435-40 amid early Tuesday in Asia, despite bouncing off a short-term key support line the previous day. In doing so, the Cable pair portrays the market’s indecision while also fails to cheer the downbeat US data amid mixed concerns about the Bank of England’s (BoE) next step.
On Monday, market players witnessed downbeat US statistics, as well as improved prints of the UK S&P Global/CIPS PMIs. However, the same initially underpinned the GBP/USD to rebound from a three-month-old rising support line before the recession woes and indecision at the BoE weighed on the Pound Sterling.
That said, US ISM Services PMI declined to 50.3 for May versus 51.5 expected and 51.9 prior whereas growth of the Factory Orders also deteriorated during the stated month to 0.4% versus 0.5% market forecasts and 0.9% previous readings. It should be noted that the final readings of S&P Global Composite PMI and Services PMI also marked softer figures for May.
On the other hand, final readings of the UK S&P Global/CIPS Services PMI and Composite PMI for May improved to 54.0 and 55.2 versus 53.9 and 55.1 initial expectations. Recently, UK BRC Like-for-Like Retail Sales growth slide to 3.7% YoY for May versus 5.2% prior. Furthermore, the latest survey from Barclays mention that the UK May Consumer Spending rose 3.6% YoY as higher food prices limit discretionary spending.
Following the data, Reuters said, “Recent data indicates previous BoE hikes are beginning to slow the UK economy, which could reignite UK recession fears and thus pressure more MPC members to vote for steady rates to help jumpstart the economy, removing the primary stimulus sterling strength.”
Elsewhere, US receding hawkish bets on the Federal Reserve (Fed) and concerns about the need for the US large banks to hold more capital to battle the landing crisis contrast with the policymakers’ ability to avoid the debt-ceiling expiration.
It should be noted that the latest political jitters in the UK, especially after the late May local elections, also prod the GBP/USD buyers.
Amid these plays, the US benchmark yields dropped on Monday while Wall Street closed in the red, with mild losses. That said, the US Dollar Index (DXY) dropped and reversed the early-day gains to end in the red with minor losses around 104.10.
To sum up, the inflation woes appear to lack the strength to keep the GBP/USD pair firmer as the market fears the UK recession and further challenges for the BoE hawks.
GBP/USD fades bounce off a three-month-old ascending support line, around 1.2375 by the press time, amid failure to cross a horizontal resistance zone comprising multiple levels marked since mid-April, close to 1.2545-50 at the latest.
Additional important levels
|Today last price||1.2435|
|Today Daily Change||-0.0015|
|Today Daily Change %||-0.12%|
|Today daily open||1.245|
|Previous Daily High||1.2545|
|Previous Daily Low||1.2442|
|Previous Weekly High||1.2545|
|Previous Weekly Low||1.2327|
|Previous Monthly High||1.268|
|Previous Monthly Low||1.2308|
|Daily Fibonacci 38.2%||1.2481|
|Daily Fibonacci 61.8%||1.2505|
|Daily Pivot Point S1||1.2413|
|Daily Pivot Point S2||1.2376|
|Daily Pivot Point S3||1.2309|
|Daily Pivot Point R1||1.2516|
|Daily Pivot Point R2||1.2582|
|Daily Pivot Point R3||1.2619|
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