Pound punches past 1.38

The British pound has started the new trading week with strong gains. Currently, GBP/USD is trading at 1.3824, down 0.60% on the day. It was a roller-coaster week for the pound, which fell into 1.35-territory early in the week, but managed to recover these losses and ended the week almost unchanged.

The UK releases CBI Realized Sales for July on Tuesday (10:00 GMT). This important gauge of the retail sector has rebounded strongly – after a reading of -45 in March, the index came in at +25 in June. Another strong reading is expected, with a consensus of +21 points.

Last week ended on a sour note, as UK PMIs slowed considerably in July. Services PMI fell to 57.8, down from 62.4, while Manufacturing PMI came in at 60.4, down from 63.9. Both PMIs slipped to 4-month lows and were short of the consensus. Still, the pound’s reaction to the PMI reports was muted, as investors took the softer figures in stride. Both manufacturing and services are performing well, as the PMIs remain well into expansionary territory. The neutral 50-level separates contraction from expansion.

The ‘Freedom Day’ experiment

The world is watching as the UK takes part in Boris Johnson’s great Covid experiment. Last week’s decision to lift health restrictions on bars and restaurants was admittedly a risky one, but the Johnson government insists that with a majority of adults immunized, Covid levels can be kept under control in a reopened economy. The British Medical Association has rejected this view, saying that the unfettered reopening of the economy has “potentially devastating consequences”. Any rise in Covid cases due to the removal of the restrictions could result in severe restrictions being reimposed, which would curb economic growth.

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GBP/USD Technical Analysis

 

  • GBP/USD is testing resistance at 1.3832. Above, there is resistance at 1.3917
  • On the downside, 1.3617 is the first line of support. This is followed by support at 1.3487

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.