- GBP bulls attempt recovery on 1.20 handle, despite USD comeback.
- No-deal Brexit risks, UK recession fears to weigh on Cable’s recovery.
- First-tier UK jobs and inflation data to draw attention later this week.
The GBP/USD pair built on its recovery from 31-month lows of 1.2016 in the European session, having reversed the entire slide to now hover near the daily top of 1.2071.
Ireland to not renegotiate the Brexit backstop
The pound extended the recent bearish momentum and went on to hit the lowest levels since January 2017 in the Asian trades, in response to increased no-deal Brexit jitters and the UK Q2 GDP shocker. The Brexit anxiety intensified after it was reported that Ireland would not renegotiate the Brexit backstop at a meeting with UK Boris Johnson later this month. This report exacerbated the pain in the spot.
Despite the ongoing Brexit woes and broad US dollar comeback, the major managed to stage a solid recovery, as markets look to take profits off the table after the prices sustained the 1.20 handle and ahead of the key UK macroeconomic data releases, including the labor market and CPI report, due later in the week ahead.
The sentiment around the greenback across the board was lifted by a shift in the risk environment, as the US-China trade escalation hit investors’ mood. Going forward, it remains to be seen if the pair can take out the 1.21 handle on the road to recovery, as mounting UK recession fears continue to weigh. Recall that the second-quarter UK Gross Domestic Product (GDP) unexpectedly contracted in June.
GBP/USD Technical levels
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