GBP/USD: Leicester’s loosening is the only positive, everything else points down
Lifting Leicester’s lockdown – that may be the only piece of positive news supporting the pound. England’s midsized Midlands city was excluded from the UK’s gradual reopening amid a resurgence of coronavirus cases, but the situation has improved – and easing is on the cards.
Other developments are causing cable to come down. The safe-haven US dollar is on the rise amid concerns about rising coronavirus cases in the US. Daily infections hit yet another new daily high of 75,000 and mortalities are rising as well. Texas denied it will impose a full shutdown, following California’s steps.
Stock markets shrugged off the superb retail sales figures – a jump of 7.5% in June, beating expectations and sending the total volume above June 2019 levels. The upbeat data failed to impress as at 1.3 million and traders are seeing June’s figures as stale. COVID-19 cases surged in the middle of last month.
An updated view is due out from the University of Michigan’s preliminary Consumer Sentiment gauge for July. It is set to show a minor advance to 79 points, stalling its bounce from the lows and well below the pre-pandemic highs of around 100 points.
See : Finally an update on coronavirus resurgence damage, S&P 500 on alert
Back in the UK, authorities revealed that Russia has been trying to steal coronavirus vaccine research and that Vladimir Putin’s country also attempted to intervene in Britain’s 2019 elections, which is dominating the press.
The news comes on top of Prime Minister Boris Johnson’s decision to phase out the usage of Huawei’s 5G equipment. The Chinese telecoms giant is suspected of close ties to the military.
Worsening relations with large countries as the UK leaves the EU may weigh on the economy and sterling. EU leaders are busy negotiating the recovery fund and do not have on their minds.
is also softer amid comments from Andrew Bailey, Governor of the Bank of England, who told MPs earlier in the week that interest rates will remain low for at least two years. Bailey speaks later in the day and may comments on negative borrowing costs – a topic that previously pounded the pound.
Overall, darkening clouds mean pound/dollar has more room to the downside than to the upside.
GBP/USD Technical Analysis
Momentum on the four-hour chart is marginally negative and GBP/USD also slipped below the 50 Simple Moving Average – both bearish signs. On the other hand, the currency pair is holding above the 100 and 200 SMAs – but only just.
Support awaits at 1.2535, where the 200 SMA hits the price. It is followed by 1.22515, a swing low earlier this week, and then by 1.23480, the weekly low.
Resistance is at 1.2570, the daily high, followed by 1.2625, a peak that was seen earlier this week. The next levels are 1.2650 and the all-important triple top of 1.2670.