GBP/USD was unable to profit from its intraday bullish advance due to a number of variables.
The pound was pulled down by COVID-19 worries and a lower UK GDP print, despite the dollar’s minor rise.
Investors are now looking for some momentum from US macro data ahead of Friday’s NFP report.
Around the last hour, the GBP/USD pair has retreated roughly 35-40 pips from Asian session swing highs and has plunged to new daily lows in the 1.3820-15 range.
The pair failed to profit from its intraday gains, instead seeing new supply near the 1.3860 level and being pressured by a number of reasons. Concerns about the development of the more contagious Delta version of the coronavirus functioned as a headwind for the British pound, notwithstanding the Bank of England’s dovish stance.
In the last 24 hours, Britain reported another 20,479 coronavirus infections and 23 deaths, according to official numbers issued on Tuesday. To add to the COVID-19 troubles, Hong Kong announced on Monday that all passenger flights from the UK will be banned beginning this Thursday in an effort to stop the spread of new coronavirus types.
The US dollar, on the other hand, was supported by expectations that the Fed would tighten its monetary policy if price pressures continued to rise. Furthermore, Richmond Federal Reserve President Thomas Barkin stated that the Fed has made significant headway toward its inflation goal and is now ready to begin decreasing asset purchases.
Tuesday’s optimistic US Consumer Confidence Index, which climbed to a new historic high in June, bolstered the already-strong greenback. The statistics indicated rising economic optimism, which served to counteract a softer tone surrounding US Treasury bond yields. This was interpreted as yet another factor putting downward pressure on the GBP/USD pair.
Meanwhile, the UK’s weaker-than-expected GDP print on Wednesday, which showed the economy fell by 1.6 percent in Q1 instead of the 1.5 percent previously projected, provided little comfort. A following drop towards the 1.3800 mark, en route to monthly swing lows at the 1.3785 region, appears to be a distinct possibility from current levels.
Moving forward, market investors are anticipating the release of the ADP data on private-sector employment, the Chicago PMI, and Pending Home Sales in the United States. This, combined with US bond yields, might influence USD price dynamics and provide the GBP/USD pair a boost. However, the major attention will remain on Friday’s US monthly jobs report (NFP).
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