The GBP/USD currency pair failed to stop its early-day losing streak and dropped further below the mid-1.2500 level, mainly due to the broad-based U.S. dollar strength. The U.S. dollar was high in demand due to fears of ever-increasing coronavirus cases and geopolitical tensions between the U.S. and the rest of the global economies like the European Union (E.U.), the U.K., and China. Elsewhere, the currency pair traders did not give any major heed to recently released data, which showed unexpected growth in the U.K. manufacturing output, They jumped 8.4% in May compared to a decline of 20.9% expected. Whereas, no progress in the Brexit talks also weighed on the Cable's pair and contributed to the pair's decline. At the moment, the GBP/USD currency pair is currently trading at 1.2521 and consolidating in the range between 1.2513 - 1.2564
At the data front, the Manufacturing output came in at +8.4% MoM in May against -20.9% expectations and -24.4% booked in April, whereas the total industrial output came in at +6.0% vs. +6.0% expected and -20.2% last. Annually, the U.K. manufacturing production figures arrived at -22.8% in May, against expectations of -23.9%. Whereas, the Total industrial output dropped 20.0% in May, against a -20.0% figures expected and the previous -23.8% print.
Apart from this, the worries over the ever-increasing numbers of the Covid-19 virus exerted bearish pressure on the risk sentiment and underpinned the board-based U.S. dollar. The U.S. recorded 59,747 new infections in the last 24 hours, as per the Johns Hopkins University. At the same time, the total number of cases in the U.S. rose to 3,479,483 figures.
According to Johns Hopkins University data, the number of COVID-19 cases globally passed the 13 million mark as of July 14, with more than 565,000 people died in the last 7-months due to the virus, as Global institute reports' tally. On the other hand, Brazil and India also followed the footstep of the U.S. They became nations with the 2nd highest number of appearing cases after the U.S. The latest figures from Florida suggested over 15,000 new cases on Sunday after the further push for schools to re-open and anti-mask protests.
Moreover, the global risk sentiment took a sharp hit by the renewed concerns about escalating US-China tension. The U.S. Secretary of State Mike Pompeo stated on Monday rejecting Chinese claims in the South China Sea and caused a surge in the ongoing tension between U.S. & China. The reason for the intensified US-China tussle could also be associated with the fresh hardships for listings of the Chinese major's companies on the U.S. floor, which exerted some downside pressure on the trading sentiment and trimmed a heavy part of its initial gains.
As in result, the broad-based U.S. dollar gained some positive traction on the day and rose sharply as investors turned to the safe-haven in the wake of an intensified tussle between US-China. However, the gains in the U.S. dollar kept the currency pair under pressure. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies gained 0.03% to 96.537 by 9:36 AM ET (2:36 AM GMT).
Looking forward, the U.S. Consumer Price Index (CPI) data for the previous month will be key to watch. However, major attention will be given to qualitative catalysts. Thus, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum.
Daily Support and Resistance
Pivot Point 1.2591
On Tuesday, the GBP/USD pair is the upward channel at 1.2600, below this, the Cable is likely to drop until 1.2525 level. The 50 periods EMA is expected to provide support at 1.2540, while the bearish breakout of this level can extend selling until 1.2402. On the higher side, 1.2670 is working as a double top, while a bullish breakout of 1.2670 can extend the buying trend until 1.2797 level. Let's consider selling below 1.2610 and buying above the same.