GBP/USD attempted to register a meaningful break above the psychological 1.2500 level for a fourth consecutive trading day on Tuesday, after slipping below it on several occasions in the past sessions, as market players awaited further details regarding UK government’s spending plans tomorrow when Chancellor of the Exchequer Rishi Sunak delivers a speech.
A report by the Guardian stated that adults would receive £500, while children – £250, in vouchers, to be spent in those sectors of the economy that had taken the most severe hit by the coronavirus pandemic. The news came a week after British PM Johnson announced a £5 billion infrastructure investment plan.
“Prime Minister Johnson’s so-called New Deal for infrastructure spending was deemed insufficient and so UK business interests are urging Sunak to be more aggressive,” Brown Brothers Harriman analysts wrote in an investor note.
Meanwhile, the US Dollar held gains against major peers on Tuesday on rising new COVID-19 cases and regional lockdowns in some countries.
“After yesterday’s strong risk rally – which also drove risky currencies higher – the reality of regional lockdowns in places like the US, UK, Spain and now Australia are a gentle reminder that the threat of a second coronavirus wave is one that investors should not be quick to price out,” Viraj Patel, global Forex and macro strategist at Arkera, noted.
As of 11:40 GMT on Tuesday GBP/USD was edging up 0.17% to trade at 1.2513, after touching an intraday high of 1.2518 during early Asian session, or a level close to Monday’s high. The major pair has gained 0.18% so far this week, following a 1.18% surge in the preceding week.
On today’s economic calendar, at 13:00 GMT Federal Reserve President for Atlanta Raphael Bostic is to participate in a conference co-hosted by the Chattanooga Chamber, the Tennessee Business Roundtable, the Nashville Chamber and the Knoxville Chamber, while at 17:00 GMT Fed Vice Chair Randal Quarles is scheduled to speak on financial stability at the Exchequer Club Luncheon via webcast.
Additionally, a report by the US Bureau of Labor Statistics at 14:00 GMT may show the number of job openings in the country decreased to 4.850 million in May, according to market expectations, from 5.046 million in April. The latter has been the lowest level since December 2014 due to the coronavirus crisis.
Bond Yield Spread
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, equaled 23.3 basis points (0.233%) as of 10:15 GMT on Tuesday, or unchanged compared to July 6th.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 1.2492
R1 – 1.2520
R2 – 1.2547
R3 – 1.2575
R4 – 1.2602
S1 – 1.2465
S2 – 1.2437
S3 – 1.2410
S4 – 1.2382