GBP/USD Rebounds from Average Intraday Loss
An Improved Daily Range for the Pair
The GBP/USD currency pair has recovered from the average daily loss it suffered. It then advanced to the high end of its trading range on the day. The daily trading height is close to the 1.2600 whole benchmarks.
All the aforementioned transpired in the first part of the early European trading session in Europe on Tuesday. After a short time of consolidation, the US Dollar began to experience new selling pressure. The dollar fell to a new low on Tuesday as the Euro got new demands.
GBP/USD price chart. Source TradingView
Consequently, this became a significant factor that aided the rise of the GBP/USD pair. The pair drew some buying of its dip close to the mid-1.2500 area. This is despite the fact that the increase did not have a bullish conviction.
Global Outlook Poorer Due to COVID and Geopolitics
The depreciating condition of the global economy and its outlook keep weighing badly on sentiments. The bad effect on investors ignited a new round of general market risk aversion moves. The evidence of this came in the visual red lines throughout the global stock markets.
The recent market sentiment is expected to act as a tailwind for the US Dollar. It is going to improve its safe-haven status in the money market. This is as there are expectations of aggressive policy implementation from the Federal Reserve.
There are also expectations the Fed would have to embark on more stringent actions. This is needed to bring the escalating inflation rates under a firm check.
The impasse between the UK and the EU over the Northern Ireland Protocol continues. It is likely to impede traders from staking aggressive wagers around the Pound Sterling. Therefore, it might be prudent for investors to hold off their purchases.
They should see a follow-up purchase before they set themselves up for an extended recovery. It is a strong move of recovery from the year-to-day low point. It is equally in the vicinity of the 1.2155 mark it reached in the early days of May.
The market is now looking forward to the publication of the Purchasing Managers’ Index. The market expects this from the United Kingdom and the United States alike. It is expected to motivate the risk sentiment in the market and influence the Dollar.
Apart from influencing the dollar dynamics, traders also expect a speech from the Fed Chairman. Jerome Powell is set to give a speech in the early North American session. Traders will be taking a cue from the speech against what is to come.
This is expected to offer a more significant impetus to the GBP/USD currency pair. The BOE is also expected to come up with policy clarity in the coming days.