Today in the early European trading session, the GBP/USD currency pair erased its previous session losses and took fresh bids around above 1.2500 psychological marks mainly after the better-than-expected UK Preliminary Manufacturing and Services PMI. The reason for the recent upticks in the currency pair could also be attributed to the risk-on market sentiment, which undermined the broad-based US dollar and contributed to the gains of the currency.
At this particular time, the GBP/USD currency pair is currently trading at 1.2491 level and consolidating in the range between 1.2436 and 1.2512. However, the downbeat concerns relating to the UK's efforts to tie-up with Japan and the European Union (EU) during the post-Brexit period. In the meantime, the flash UK Services Business Activity Index for June also exceeded consensus forecasted figures and came in at 47 for June versus May's final reading of 29 and 40 expected.
However, the reason behind the currency pair previous session losses could be attributed to the negative report that Japan wanted to do deal with the UK as soon as possible as in result they gave a six-week deadline which eventually exerted further downside pressure on the British representatives who are already struggling to break the Brexit deadlock. At the Brexit front, the UK policymaker and EU policymakers were eager to conduct the Brexit talks soon to aim for any reliable outcome before the autumn. At the coronavirus front, the coronavirus cases from the UK have reached to the pre-lockdown period while raised to 958 as per the latest update from the BBC.
At the USD front, the broad-based US dollar failed to maintain its early day bullish moves and edged lower at least for now, mainly due to the fresh risk-on wave in the market sentiment triggered by the multiple reasons which gave a boost to the risk market and contributed to the greenback's decline. However, the declines in the US dollar kept the currency higher.
The traders will keep their focus on the flash version of the US Manufacturing and Services PMI for June. This data will be followed by the release of New Home Sales data and the Richmond Manufacturing Index, which will leave an impact on the USD price dynamics and produce some short-term trading opportunities around the currency pair.
Daily Support and Resistance
S1 1.2158
S2 1.2271
S3 1.231
Pivot Point 1.2383
R1 1.2422
R2 1.2496
R3 1.2608
Technically, the GBP/USD pair seems to face a substantial resistance at a level of 1.2510, and below this, the next support is expected to be around 1.2383. A bearish breakout of this level can extend selling until 1.2330. On the 4 hour chart, the recent closing of candles below 50 EMA and the bearish engulfing candle is suggestings odds of selling bias in the GBP/USD pair. On Tuesday, we should look for selling trades until the 1.2383 level today. Good luck!