Daily Market Recap - GBPUSD

The GBPUSD is edging lower on Tuesday after a lackluster UK GDP reading and a downturn in risk sentiment fuelled demand for the safe-haven greenback. The pair is currently shedding 0.21 percent for the day trading at 1.25278.

After a quiet start to the week, Tuesday‘s economic calendar provided some heftier data to the table. The UK’s month over month GDP figures for May came in significantly below expectations at 1.8 versus 5 percent. The large gap is raising questions over the speed of the estimated economic recovery and, as a consequence, placing the Pound under pressure.

The recent impact of the uptick in coronavirus cases around the world is being felt in Europe with the ZEW July economic survey reporting a deterioration in investor optimism from the previous month as businesses fear the rising risk of another round of confinement measures should infection rates get out of hand.

Over in the US, California imposed new lockdown restrictions as a dramatic rise in virus cases prompted officials to take action. The news triggered a selloff in US equities with the Nasdaq dropping by 2.13 percent yesterday but appears to have stabilized in pre-market. Analysts pointed out that the downturn in the Nasdaq tends to bring about a sharper correction in other major indices.

From a technical perspective, the GBPUSD looks set for some choppy trading in the coming sessions as momentum appears to be slowly tilting in favor of the bears. The pair will have to close above the 1.250 marks to retain its bullish trajectory, failing to do so may open the door for a test of the 0.2382 Fibonacci retracement level at 1.24313. The likely short term range will be the upper 1.26316 resistance level and lower 1.240 support level.

(Chart Source: Tradingview 14.07.2020)

Looking ahead, US inflation data to be released later today should trigger some movement in the greenback and accordingly the GBPUSD. That said, the expected target values are not very aggressive and will likely be met according to early reports.

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.