Daily Market Recap - GBPUSD

The British Pound is continuing its hot run of form on Thursday buoyed by larger risk-on sentiment in the market. The GBPUSD is up nearly 1.5 percent on the weekly chart, setting a new monthly high today at 1.267.

The overall mood around the GBPUSD is increasing after yesterday‘s announcement by the UK Chancellor of the Exchequer Rishi Sunak of a new stimulus package of totaling 30 billion Pounds. Bulls welcomed the news as a signal of the UK’s willingness to step in to prop up markets though critics have voiced concern the sum may not be high enough.

Weakness in the greenback continues to be felt on Thursday, with the Dollar index (DXY) fighting to gain a foothold around 96.50. The sustained strong performance in the US equities market and upbeat US labor data is keeping the safe-haven US Dollar under pressure.

In Brexit news, trade negotiations between the UK and EU appear to be moving along well as both sides seem to have agreed on a solution to a longstanding fishing rights dispute. Optimism over attaining a comprehensive trade deal before the end of the year is helping to support the British Pound.

From a technical perspective, the GBPUSD is testing the downward resistance trendline from June. Price action at this point should dictate whether momentum is sufficient to test above the 1.270 handles. On the flip side, the GBPUSD has a lot of room to fall as the next support should be felt around the 1.250 marks.

(Chart Source: Tradingview 09.07.2020)

Looking ahead, volatility may be lower in the coming sessions as we round off the week with no major UK economic data releases expected before next Tuesday‘s May GDP growth figures. Traders will have an opportunity to react to the Bank of England’s Governor Bailey's speech on Monday.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.