The GBP/USD currency pair succeeded in stopping its early-day losses and gained some positive traction on the day around 1.3165 level, mainly due to the reports that suggested the U.K. government's push for the coronavirus (COVID-19) trials. This comes after the University of Cambridge received 1.9 million pounds of government help for the autumn trials' coronavirus vaccine. Besides this, the latest Brexit optimism led by the Irish leader Michael Martin's positive statement also favored the on-going bullish sentiment around the British pound and contributed to the currency pair gains.
On the contrary, the broad-based U.S. dollar strength, backed by the risk-off market sentiment, also capped further upside in the currency pair. At this particular time, the GBP/USD currency pair is currently trading at 1.3154 and consolidating in the range between 1.3126 - 1.3165.
The U.K. policymakers allowed the U.K. drug makers to start testing an antibody-based cocktail to prevent and treat COVID-19, which added further progress on possible medical solutions to the virus. We can say that the U.K. policymaker followed the U.S. action to find the pandemic's cure, either via rushing for vaccine deals or authorizing plasma usage for treatment. Apart from this, the U.K. government's funding for the University of Cambridge's COVID-19 vaccine trials also added a further positive impact around the currency pair.
Also supporting the factor could be the reports that Irish leader Michael Martin shared his positive feelings about Brexit deal after meeting the UK PM Boris Johnson for the first time after selected in June. Whereas, the (E.U.) diplomat Michel Barnier has advised being 'cold-blooded' with the U.K. as the Brexit trade deal deadline looms.
On the other hand, the doubts over the global economic recovery from COVID-19 turned gloomy after the disappointing U.S. data. At the data front, the August's Conference Board (C.B.) consumer confidence index dropped to 84.8; it was the lowest level since May 2014. The data was much weaker than the estimation of 93 and was also weaker than July's figures of 91.7. This data exerted some downside pressure on the market trading sentiment and provided some support to the safe-haven asset.
At the USD front, the broad-based U.S. dollar succeeded in gaining positive traction and edged higher on the day amid mixed sentiment. However, the modest gains in the U.S. dollar limited the further upside for the currency pair. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose 0.05% to 93.062 by 10:15 PM ET (3:15 AM GMT).
Moving ahead, the data about U.S. durable goods orders and the speech of Fed Chair Jerome Powell will remain under observation by the market participants for taking fresh clues.
Daily Support and Resistance
S1 1.2899
S2 1.2995
S3 1.3032
Pivot Point 1.3091
R1 1.3128
R2 1.3186
R3 1.3282
The GBP/USD pair is trading with a neutral bias at 1.3147 level, trading mostly within a sideways trading range of 1.3172 to 1.3126 level. Violation of this range can drive further movement in the market. Sterling may find the next movement on the higher side until 1.3255 level, while the bearish breakout of 1.3126 level can extend selling unto 1.3056. Let's brace to trade the breakout. Good luck!