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Upward Channel Supports GBP/USD - Buyer Looms to Capture Breakout! 

EagleFX

The GBP/USD currency pair registered another day of the bullish trend and took bids above mid-1.2700, mainly following Upbeat U.K. retail sales, which gave support to the pound and contributed to the pair gains. However, the ongoing Brexit uncertainty, intensifying UK-China tussle, and doubts over the U.S. stimulus become critical factors that kept the lid on any further upside in the pair. Apart from this, the broad-based U.S. dollar started to lose its early-day gains, possibly due to fears of the U.S. unemployment rate, which eventually support the currency pair.

The GBP/USD is trading at 1.2747 and consolidating in the range between 1.2718 - 1.2773. Moving on, the currency pair's traders seem cautious to place any strong position ahead of the Markit's preliminary Purchasing Managers' Indexes for July.

At the data front, the U.K. retail sales arrived at +13.9% over the month in June vs. +8.0% expected and +12.0% previous. The core retail sales, stripping the auto motor fuel sales, stood at +13.5% MoM vs. +7.5% expected and +10.2% previous. As per an annual basis, the U.K. retail sales stood at -1.6% in June versus -6.4% expected and -13.1% prior, while the core retail sales unexpectedly rose 1.7% in the reported month versus -3.7% expectations and -9.8% previous.

Talking about the Sino-American tussle, the tussle between the United States and China took a further pace after China ordered the U.S. office's closure in Chengdu, a tit-for-tat reply for the United States previous move over the Chinese office closure in Houston. Whereas, the tension fueled further when the U.S. President Donald Trump said that China trade deal "means less to me now than it did" during his daily press briefing. The U.S. Secretary of State Mike Pompeo said on the day that the Chinese consulate in Houston was a hub of spying and I.P. theft. However, the overall market mood has soured, which supporting the safe-haven assets.

Despite this, the broad-based U.S. dollar failed to maintain its early-day gains and edged lower at least for now due to the downbeat U.S. jobless claim data. However, the losses in the greenback could be short-lived or temporary as the coronavirus continuously picking up pace in the U.S. The losses in the U.S. dollar kept the currency pair higher for the time being. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.02% to 94.625.

Across the pond, the tussle between the United Kingdom and China also remained on the card, which was triggered by U.K.'s decision to phase out Hauwei's technology, and more recently, the cancelation of the extradition treaty with Hong Kong in the wake of Beijing's tighter grip on the city-state. However, these gloomy updates weigh on the cable pair and limit its further gains.

At the Brexit front, there is still no progress in the talks, and considering this situation, Chief EU Negotiator Michel Barnier and David Frost, his counterpart across the channel, acknowledged the lack of progress but explained that discussions would continue as well. As per the latest news from the British press, Prime Minister Boris Johnson considered leaving the negotiating table. As a result, the investors became cautious and expected progress only closer to the transition period's expiry at the end of the year.

Moving on, the Markit's preliminary Purchasing Managers' Indexes for July may show ongoing improvement in sentiment as the U.K. is getting the virus under control.

Speaking of the U.S. virus condition, the United States crossed 4 million officially recorded Covid-19 cases, and a significant part of that recorded in just the last 15 days. As per the Johns Hopkins University's latest report, the U.S. has officially recorded 4,005,414 cases. While at least 143,820 people have died so far and a report suggests that the cases are picking further pace

Looking forward, the market players will keep their eyes on the preliminary readings of July month activity data from Australia, Europe, the U.K., and the U.S. for fresh impulse. Traders will also 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

S1 1.2548

S2 1.2636

S3 1.2686

Pivot Point 1.2723

R1 1.2773

R2 1.281

R3 1.2898

The GBPUSD is also trading in overbought territory at 1.2740 level, and it has a closed series of neutral candles below 1.2765 resistance. Neutral candles are suggesting indecision among traders. The 50 EMA is suggesting buying, and it may extend support at 1.2660 level. Closing of candles below the 1.2667 level keeps traders out of the market as traders are waiting for a bullish breakout before placing bullish bets in the GBP/USD pair. Let's consider taking buying trade over 1.2765 and bearish below the same level today. Good luck!

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