During European Trading Session, the GBP/USD currency pair successfully extended its previous-day winning streak and rose above 1.3100 level, mainly due to the broad-based U.S. dollar weakness. The coronavirus crisis in the U.S. triggered that after the job losses in the U.S. manufacturing sector, fuel worries that the second wave of COVID-19 cases could undermine the U.S. economy. The repeated failure over the much-awaited stimulus also added a burden on the U.S. dollar and pushed the currency pair further higher.
On the other hand, the fresh optimism over the Tory government's further economic stimulus 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 on-going pessimism of coronavirus (COVID-19) second wave in the U.K., and the UK-China tussle became the major factors that kept the lid on any further gains in the currency pair. At this moment, the GBP/USD currency pair is currently trading at 1.3096 and consolidating in the range between 1.3059 - 1.3123.
During earlier in the day, the British Chancellor Sunak announced further relief packages as per the report from the Telegraph. The U.K. diplomat Rishi Sunak is thinking about an increase in business rates. For the time being, the levy is not charged on the first £125,000 of the property selling price, with a 2 percent rate up to £250,000 and 5 percent on the next £675,000," However, this new initially gave support to the Britsh Pound and contributed to the pair gains. Also supporting factor for the currency pair is the BBC's report that an £800m fund to prepare the Welsh National Health Services (NHS) for a possible 2nd-wave of coronavirus (COVID-19) announced by the ministers.
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 homes and infrastructure construction, as per the Financial Times (F.T.). This news also boosted the sentiment around the British Pound and maintained the currency pair above 1.31 figures.
At the Brexit front, the European Union (E.U.) is ready to compromise Brexit talks by decreasing their demand. Elsewhere, the currency pair's gains were further bolstered by the U.K. Express headlines, which indicated plans to introduce ten freeports after the end of the transition period. Across the pond, the U.K.'s good progress on the trade talks with the U.S. and Japan also exerted some positive impact on the currency pair.
On the other hand, the fears of rising COVID-19 cases, especially in the U.S., Australia, Japan, and some of the notable Asian nations like India, fueled worries that the economic recovery could suffer, which eventually drags the broad-based U.S. dollar down. The on-going uncertainty surrounding the much-awaited U.S. fiscal stimulus and the latest tension between America and China over TikTok also weighed on the broad-based U.S. dollar and contributed to the currency pair gains.
As in result, the broad-based U.S. dollar reporting losses on the day as the United States still facing virus woes, which eventually destroyed hopes for a quick economic recovery, witnessed by the yesterday's downbeat U.S. job data. However, the losses in the U.S. dollar helped the currency pair to stay higher. Whereas, the U.S. Dollar Index that tracks the U.S. dollar against a bucket of other currencies dropped by 0.09% to 93.148 by 10 AM ET (3 AM GMT).
Later today, eyes will remain on the US ADP Employment Change and ISM Non-Manufacturing PMI, as these have a will be vital to watch. In the meantime, the updates on the virus and Sino-American tension could not lose its importance.
Daily Support and Resistance
S1 1.2799
S2 1.2925
S3 1.2996
Pivot Point 1.3052
R1 1.3122
R2 1.3178
R3 1.3305
The GBP/USD is trading bullish at 1.3117 level, holding right beneath the triple top resistance area of 1.3101 level while the bullish breakout of 1.3105 can drive more buying in the GBP/USD pair. On the higher side, the GBP/USD may find resistance at 1.3175, while support can be found around 1.3056 and 1.3022 level. Taking a look at the 4-hour timeframe, GBP/USD's RSI stays over 50, suggesting chances of a bullish bias. Let's consider taking buying trade over 1.3065 levels and selling below 1.3175. Good luck!