The GBP/USD pair has been defending the 1.3800 level, which has been modestly bid recently.
Despite an increase in covid cases, UK Prime Minister Boris Johnson supports a new tax package that favors social care.
The EU and the United Kingdom are squabbling about the Brexit cost, and the Bank of England has been instructed to keep inflation in check.
According to comments made during EU’s von der Leyen’s NI visit, consumer-centric data from the United States will be crucial.
GBP/USD rises 0.08 percent to 1.3838, reaching an intraday high of 1.3840, ahead of Friday’s London opening. The cable pair fell the day before, owing to conflicting signals from officials at the Bank of England (BOE) and the Federal Reserve (Fed), as well as concerns about Brexit and the coronavirus (COVID-19). However, recent confidence about the UK’s unlocking and a decline in the US dollar appear to be favoring the quote’s rebound.
According to Michael Saunders, a policymaker at the Bank of England, they will discuss whether to reduce the existing asset purchase program and/or take additional policy action next year in the coming months. Fed Chair Jerome Powell, on the other hand, repeated his defense of the US central bank’s current monetary policy.
The market’s perplexity was fueled by the mixed UK jobs report, which showed a higher Unemployment Rate for the three months ending in May and a slower decline in the Claimant Count Change than the day before. Prior to then, inflation data supported the need for a hawkish BOE.
In other news, the European Union (EU) and the United Kingdom recently spat over the Brexit bill, with British diplomats estimating a value of GBP3.5 billion lower. Furthermore, the UK recorded over 50,000 cases, which is, unfortunately, the greatest number of infections since January, but Prime Minister Boris Johnson claimed, according to the Independent, that the worst of the pandemic is likely passed.
On the plus side, an article from The Times indicating UK Prime Minister Boris Johnson’s backing for a new tax structure to pay for social care changes appears to provide fresh stimulus and support GBP/USD prices. It should be noted that the Financial Times’ early-day story indicates that the UK’s House of Lords is pressuring the Bank of England (BOE) to lower inflation, which will benefit cable buyers.
Stock futures have reversed early Asian losses, while US Treasury rates have broken a two-day decline, putting pressure on the US Dollar Index (DXY).
Looking ahead, comments from EU’s von der Leyen and risk catalyst will entice GBP/USD traders ahead of expectedly strong preliminary readings of the Michigan Consumer Sentiment Index, to 86.5 versus 85.5 previous readouts, as well as the US Retail Sales for June, likely +0.4 percent versus -0.7 percent prior.
Read: June Retail Sales in the United States: A Look Ahead Examining the reactions of major pairs to prior releases
The GBP/USD exchange rate is falling. Thursday’s losses came after a two-week bounce off a horizontal support zone around the 1.3800 round figure. Nonetheless, MACD conditions aren’t conducive to the pair’s continued rise, implying a fresh pullback from recent resistances, especially 1.3875-80 and the 1.3900 round figure. A negative violation of the 1.3800 local support, on the other hand, will push sellers to the weekly channel’s support near 1.3780./n
