GBP/USD quickly erodes 50-pips, turns south towards 1.3800
|- GBP/USD rises for the first time in four trading days.
- Risk recovery offsets poor UK data, Brexit, covid woes.
- DXY weakness boosts the cable but London fix weighs.
GBP/USD runs into fresh supply into the London fix on Friday, quickly giving away nearly 50-pips to turn back towards the 1.3800 level.
The cable, however, witnessed a stellar recovery from multi-day troughs of 1.3741, although fell short of the 1.3900 barrier before the sellers fought back control.
The 115-pips rebound in the cable came on the back of a sharp turnaround in the risk sentiment, as global stocks rallied and dulled the US dollar’s appeal as a safe haven.
Investors seem to shrug off the latest concerns over the Delta covid variant and its impact on the global economic recovery, as bargain hunting seems to have resurfaced after Thursday’s sell-off across the board.
Meanwhile, renewed Brexit concerns, surging covid cases in the UK and downbeat GDP also fail to have any impact on the pound, as the risk-on flows remain the main market driver.
The Financial Times (FT) reported early Friday, “Brussels and London were on Thursday locked in a dispute over the size of the UK’s Brexit bill, after the EU suggested that Britain would be obliged to pay €47.5bn (£40.8bn) as part of its post-Brexit arrangements.”
On the covid updates, the UK saw a jump of 32,551 new infections on Thursday, which could threaten PM Boris Johnson’s reopening plans.
Investors also paid a little heed to the disappointing UK statistics, as the GDP missed estimates with 0.8% in May while Britain’s Manufacturing Production dropped unexpectedly by 0.1% MoM in the reported month.
GBP/USD: Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.