- GBP/USD keeps gains from 1.3065 despite the latest pullback from 1.3096.
- UK Consumer Spending recovers in July, London-Tokyo trade talks linger.
- No10 vows action on illegal French fishers, BOE’s Ramsden signal further QE if the economy worsens
- US dollar fades upside momentum, market sentiment stays positive despite risk-negative headlines.
GBP/USD picks up the bids near 1.3090, up 0.11% on a day, while heading into the London open on Tuesday. The Cable extends Monday’s winning streak despite downbeat comments from the BOE policymaker as well as Brexit woes. The reason could be spotted from the US dollar’s pullback after rising for two consecutive days. Though, the traders remain cautious ahead of the key UK employment numbers for July that may please the pair buyers.
Early in Asia, the Bank of England (BOE) Deputy Governor Dave Ramsden showed readiness on the part of the “Old Lady” to escalate the Quantitative Easing (QE) if the economy falters again. The BOE recently raised its economic forecasts during last Thursday's monetary policy meeting but struck a cautious tone.
Also on the negative side is the Daily Express news suggesting the UK government has vowed to take action against illegal French fishermen at the conclusion of the EU transition period. The same worsens odds of a good Brexit at a time when the talks are struggling for a pace. On the other hand, the UK-Japan trade negotiations also stuck on Monday whereas British PM Boris Johnson’s readiness to recall the lockdown flashed red signals for the coronavirus (COVID-19) watchers.
It should also be noted that Reuters relied on the data from Barclaycard and the British Retail Consortium to convey that British consumers spent the most last month since the country went into a coronavirus lockdown in March, as pubs, restaurants, barbers and beauty salons reopened.
Alternatively, US President Donald Trump’s executive orders pushed China to retaliate by sanctioning 11 American diplomats. However, the positive impacts, concerning the increased odds a stimulus, were majorly followed.
Against this backdrop, the S&P 500 Futures and stocks in Asia-Pacific flash gains whereas the US 10-year Treasury yields rise one basis point to 0.584% by the press time. The same cool down the US dollar index (DXY) that grew during the last two days.
Looking forward, the UK employment data will be the key for the GBP/USD pair traders as bulls will analyze the clues of the recent economic restart and stimulus to foresee near-term moves of the pair. Forecasts suggest the headline Unemployment Rate rise to 4.2% from 3.9% and join the downbeat comments from the BOE policymaker’s to challenge the latest upside moves.
Read: UK Jobs Preview: Feeble figures still furloughed? Another robust report may boost BOE-fueled rally
Following the UK data, risk catalysts will be in the spotlight amid a light calendar.l
Technical analysis
While overbought RSI conditions could be spotted for the pair’s inability to rise, 10-day EMA and an ascending trend line from April 14, respectively near 1.3035 and 1.3000, offer strong downside support to challenge the sellers. Even so, buyers are likely to remain cautious unless successfully breaking 1.3200 mark comprising March month high.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.