- GBP/USD slows around 1.3056
- The pair had witnessed the largest gains in a decade in July
- Worries on multiple fronts including Coronavirus fears, US dollar pullback, and uncertainty over Brexit talks halted the upward momentum
- Thursday’s BOE will be significant attention; immediate direction to be set by early-month activity numbers
GBP/USD failed to sustain above its March high on Friday but still ended July with the biggest monthly gain in a decade – clocking over 5.5 Percent gains. GBP/USD was trading around 1.3090 while heading into the London open today. Probably, the bulls are charging up ahead of the important numbers from the US and Britain.
The pair had many solid reasons to ease from the top price posted recently: the US dollar pulled back from its recent lows, the second wave of Coronavirus was confirmed – and the possible London lockdown; added to this, the latest comments from Britain’s top scientists, according to The Guardian, that secrecy has harmed the government’s response to the virus crisis.
On the positive side, the Telegraph reported that businesses are in the recovery mode in the UK. The continuing uncertainty in Brexit talks – with Brussels and UK not receding from their demands regarding level playing field, fisheries, etc. will continue to weigh on the exchange rates. The talks are expected to restart on August 17.
The much-awaited aid package to be ratified by the US policymakers is still in limbo without an agreement on the details, thus missing the deadline for jobless-claims-benefits aid-package expiry.
Markets are exhibiting directionless tone with S&P 500 Futures near earlier close, and the US 10-year Treasury yields increased 0.7 basis points. Asian markets were also trading mixed with Japan’s Nikkie posting gains and Indonesia’s IDX in the red.
Today, the UK’s July Manufacturing PMI, expected to be in line with the 53.6 initial forecasts, will be guiding the market expectations ahead of US July month PMIs from the Markit and the ISM. Further recovery in the US dollar is expected from economic readings though traders are not so sanguine about risk catalysts ahead of the BOE.
