GBP/USD encountered resistance at 1.2670, or the area near the high from June 16th, for a third straight trading day on Monday, beginning what is going to be a macro data-laden week.
The US Dollar lost its safe haven allure and risk-sensitive currencies advanced over the past week on investor bets the worst of the coronavirus pandemic is already over. Risk sentiment has improved due to a host of factors, including upbeat macro data so far indicating recovery from lockdown restrictions as well as hopes of a potential COVID-19 vaccine.
Gilead Sciences Inc announced on Friday that more data from a late-stage study revealed its antiviral remdesivir lowered the risk of death and led to a considerable improvement in conditions of patients severely affected by the novel coronavirus.
The Pound has also drawn support from the recently announced fiscal stimulus by the UK Finance Minister Rishi Sunak to aid a gradual recovery.
However, the continuing surge in new coronavirus infections and uncertainty surrounding Brexit are still making way for concerns. Britain’s information campaign, titled “The UK’s new start: let’s get going” and launched on Monday, aims to urge businesses and consumers to make preparations for the end of the current transition period on December 31st. Yet, a survey by lobby group the Institute of Directors showed only a quarter of businesses in the UK were fully prepared for that date.
As of 11:47 GMT on Monday GBP/USD was edging down 0.21% to trade at 1.2596, while moving within a daily range of 1.2592-1.2666. Last Thursday the major pair surged to 1.2670, or its strongest level since June 16th (1.2688). GBP/USD appreciated 1.13% last week, following another 1.18% gain in the business week ended July 3rd.
On today’s economic calendar, at 15:30 GMT Federal Reserve President for New York John Williams is expected to speak at the “LIBOR: Entering the Endgame” video webinar, organized by the Bank of England and the New York Fed. Bank of England Governor Andrew Bailey is also scheduled to speak at the webinar.
GBP traders will be also expecting the data prints concerning UK’s balance of trade, Gross Domestic Product and industrial output for May, scheduled to be released at 6:00 GMT on Tuesday. Annualized industrial production is expected to shrink 20% in May, while annualized GDP is expected to contract 20.9%.
The US CPI inflation and retail sales reports for June, due out on Tuesday and Thursday respectively, will also be on investors’ radar for clues over consumer spending – a major driving force of US economy.
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 25.1 basis points (0.251%) as of 10:15 GMT on Monday, down from 26.4 basis points on July 10th.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 1.2618
R1 – 1.2669
R2 – 1.2715
R3 – 1.2766
R4 – 1.2817
S1 – 1.2571
S2 – 1.2520
S3 – 1.2474
S4 – 1.2428
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