GBP/USD started the week on a strong note, but talks of the US looking to impose a trade tariff on certain UK imports have weighed on the pair.
At the same time, the exchange rate has been underpinned by optimism that an easing of lockdown restrictions will aid the British economy in its recovery.
UK Prime Minister Boris Johnson has announced that pubs, restaurants, hair salons, as well as several other businesses, will reopen next Saturday. Further, households will once again be at liberty to invite over guests.
The unemployment claims report from the US yesterday was slightly worse than analysts had expected. There was also an upward revision to show more people had filed claims in the week prior than was originally reported. However, the continuing jobs claims component of the report signaled that people are starting to return to the workforce, somewhat weighing out the negative.
GDP growth in the United States was reported to decline 5% on an annualized basis in the first quarter which was in line with expectations.
Later in the North American session, the latest PCE price index figures will be released along with personal spending data and the University of Michigan consumer sentiment report.
GBP/USD has retreated back towards weekly lows but is set to post a small gain this week. Meanwhile, the US dollar index (DXY) is on pace to post a weekly loss and a potential bearish reversal candle on a weekly chart.
For the session ahead, major resistance for GBP/USD is seen near the 1.2500 handle. There is a downward trend channel in play, and the upper bound of it falls near the level to create a resistance confluence.
A bullish breach above it would suggest that the correction that has taken place from the June 10 high has completed. While below the resistance confluence, there is potential for a further loss towards support near 1.2300.
- GBP/USD is weighed by trade tariffs concerns but supported by optimism on an announcement earlier in the week of a further easing of lockdown restrictions.
- The pair remains in a downtrend, major overhead resistance is seen at 1.2500.
For a look at all of today’s economic events, check out our economic calendar.