During Monday's European Trading Session, the GBP/USD currency pair managed to extend its early-day gains and rose to 1.3122 level, mainly due to the broad-based U.S. dollar weakness. That was triggered by the uncertainty surrounding the much-awaited coronavirus (COVID-19) relief package from America. The upbeat market mood also undermined the safe-haven U.S. dollar. Elsewhere, the fresh optimism over the easing of lockdown restrictions and the increasing hopes of Brexit talks by Tuesday also added strength around the Pound currency and contributed to the currency pair gains. On the contrary, the fresh conflict-related headlines between the U.K. and the U.S. became the key factor that capped further upside in the currency pair. At a particular time, the GBP/USD currency pair is currently trading at 1.3087 and consolidating in the range between 1.3084 - 1.3122.
The U.K.'s Secretary of State for International Trade Liz Truss recently showed a willingness to safeguard the Scotch whiskey after tariffs imposed on it by Washington. In that case, the diplomat also criticized the European Union (E.U.) while keeping the view to safeguard Scotch whiskey from Washington and suggested the in-principle trade agreement with Japan by the current month's end. However, these headlines failed to exert any major reaction on the local currency.
At the Brexit front, the U.K.'s Brexit negotiator David Frost targeted a September trade deal after the recent talks. Whereas, the British diplomat will have to solve the major barriers such as the fishing and the level playing field, which is less likely and may disappoint the GBP buyers.
However, the bullish tone around the currency pair was supported by the optimism that the UK PM Johnson's office started to ease the virus-led lockdown restrictions despite the British scientists' warnings that the nation was 'nowhere near' level of coronavirus immunity needed to prevent a second wave.
On the other hand, the U.S. House Speaker Nancy Pelosi recalled the Senators from their month-long vacation to defend the post offices, and this news raised the hopes for the coronavirus relief package. This supported the U.S. dollar and kept check on the additional gains of the currency pair GBP/USD pair. Meanwhile, the failure of an online meeting between the diplomats from Washington and Beijing to review the trade deal during this Saturday, along with the strengthened virus wave 2.0, kept challenging the risk-on mood.
As a result, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day as doubts about the U.S. economic recovery remain amid coronavirus crisis. However, the losses in the U.S. dollar helped the currency pair to take bids on the day. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.07% to 93.023 by 10:04 PM ET (3:04GMT). In the absence of the major data/events on the day, the market traders will keep their eyes on the headlines concerning the US COVID-19 aid package, virus figures, and Sino-American trade.
Daily Support and Resistance
S1 1.2912
S2 1.3003
S3 1.3044
Pivot Point 1.3094
R1 1.3135
R2 1.3184
R3 1.3275
The GBP/USD pair has come out of the symmetric triangle pattern, extending its resistance at 1.3060 level. For now, the same level is working as a support for the Sterling. On the higher side, the GBP/USD may find resistance at 1.3138 level and 1.3190 level. Closing of candles beneath this level may extend selling trades until 1.3040 and 1.3017 level. Besides, the bearish breakout of the 1.3017 level can lead the Sterling price towards 1.2949 level. Good luck!