- The incoming weaker UK macro data continues to weigh on the GBP.
- Some renewed USD weakness helped limit any further downfall.
The GBP/USD pair held on the defensive through the mid-European session, albeit has managed to recover a major part of its early slide to near two-week lows.
A combination of negative forces continued denting sentiment surrounding the British Pound and kept exerting some downward pressure on the major for the second consecutive session on Tuesday – also marking the fifth day of a downtick in the previous six.
Against the backdrop of persistent fears of a no-deal Brexit, an unexpected steep downturn in business activity in the UK construction sector exerted some additional downward pressure on Tuesday and dragged the pair to an intraday low level of 1.2606.
In fact, the UK construction PMI tumbled to 43.1 in June from 48.6 in the previous month, marking the worst decline since April 2009, and added to Monday’s awful UK manufacturing PMI, though some renewed US Dollar weakness helped limit deeper losses.
Despite the latest positive trade-related development, market participants remained convinced that the Fed will cut interest rate at its July 30-31 meeting. The same was reinforced by a fresh leg of a downslide in the US Treasury bond yields and exerted some pressure on the greenback.
It would now be interesting to see if the pair is able to capitalize on the recovery move or the uptick meets with some fresh supply at higher levels amid absent relevant market moving economic releases from the US and heightened UK political/economic uncertainty.
Technical levels to watch
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