The GBP/USD managed to stop its previous two-day losing streak and rose above 1.3100 level. That was mainly due to the broad-based U.S. dollar weakness, triggered by the coronavirus crisis in the U.S., witnessed by the Job losses in the U.S. manufacturing sector, which continued to fuel worries that the second wave of COVID-19 cases could undermine the U.S. economy.
The fresh optimism over the Tory government's further economic push and the increasing odds of a soft Brexit also added strength around the Pound currency and contributed to the currency pair gains. On the other hand, the ongoing pessimism of coronavirus (COVID-19) second wave, and the UK-China tussle became the major factors that kept the lid on any further currency gains pair. Currently, the GBP/USD currency pair is currently trading at 1.3102 and consolidating in the range between 1.3060 - 1.3108.
The UK PM Boris Johnson-led Tory government has decided to inject a £900m funding help for more than 300 'shovel-ready' projects in England to accelerate the construction of homes and infrastructure, as per the Financial Times (F.T.). This news recently boosed the sentiment around the British Pound and pushed the currency pair above 1.31 figures.
Apart from this, the unnamed diplomatic sources recently confirmed that the European Union (E.U.) is ready to compromise on Brexit talks by decreasing their demand that U.K. heeds E.U. rules on state aid in the future. Elsewhere, the currency pair's gains were further bolstered by the U.K. Express headlines, which indicates plans to introduce ten freeports after the end of the transition period.
On the negative side, the ongoing rise in the U.K.'s new cases by 938, the highest since June, became the key factor that capped further upside in the currency pair. Acors the Pound, the latest Tory government's latest warning to the medical suppliers to stockpile, and the former Tory leader Sir Iain Duncan Smith's push for reopening the withdrawal agreement also weigh on the pairs quote.
On the other hand, the losses in the equity market were bolstered by the fears of rising COVID-19 cases especially in U.S., Australia, Japan and some of the notable Asian nations like India, which fueled worries that the economic recovery could be stopped in the wake of the resurgence in coronavirus cases. As per the U.S. latest report, the U.S. cases report almost 60,000 daily, which eventually ruined hopes for a quick economic recovery and witnessed the Job losses in the U.S. manufacturing sector.
At the U.S. data front, the US ISM Manufacturing figure rose to a 15-month top of 54.2 in July, while the employment sub-index remained well below 50%, which suggests that companies in the U.S. continued to decrease jobs in July. However, this previous day released data that put brakes on the U.S. dollar's recovery sentiment and contributed to the currency pair gains.
At the USD front, the broad-based U.S. dollar reporting losses on the day as the United States still facing virus woes and struggled to control a spike in coronavirus cases, witnessed by the Job losses in the U.S. manufacturing sector, which eventually destroys hopes for a quick economic recovery. However, the losses in the U.S. dollar helped the currency pair to stay higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies was stood at % 93.498.
Despite the U.S. policymakers' failure to decide on the unemployment claims benefits and the much-awaited fiscal package, the equity market flashed mixed signals, which also weighs on the broad-based U.S. dollar. In the absence of the British calendar, the market players will carefully follow Japan's inflation numbers for July, introducing Aussie Retail Sales, Trade Balance, and monetary policy meetings by the RBA to entertain the Asian traders. Apart from this, the coronavirus related news and updates from the U.S., relating to the fiscal stimulus, will be the key to watch.
Daily Support and Resistance
S1 1.2848
S2 1.2956
S3 1.3015
Pivot Point 1.3064
R1 1.3123
R2 1.3172
R3 1.328
The GBP/USD is trading at 1.3065 level, within symmetric triangle pattern, and having achieved the 50% Fibonacci retracement at 1.3060 mark. On the higher side, the Sterling can find resistance at 1.3105. In the daily timeframe, the Cable has created a Doji pattern, which is accompanied by a solid bullish trend at 1.3100 level, and it has the potential to encourage bearish bias in the pair. Let's keep an eye on 1.3125 to extract a bearish bias in the GBP/USD pair today. A bearish breakout of 1.3050 can drive more sales until 1.3005. Good luck!