- Risks a break below 1.2400 on UK data disappointment, less dovish Powell.
- King dollar rules amid odds of smaller Fed rate cut this month.
- BOE rate cut bets, Brexit worries continue to weigh on the pound.
Sellers returned in the Asian trades, sending GBP/USD back to the midpoint of the 1.24 handle, having failed several recovery attempts near 1.2475 region. The Cable looks vulnerable and risks a break below 1.2400 should Fed Chair Powell hint at a smaller rate cut this month.
The sentiment around the British currency remains undermined amid increased odds of a Bank of England (BOE) rate cut, in the face of the recent streak of awful UK PMI readings that underscored recession fears. The bearish pressure could accentuate on a disappointment in the fresh batch of UK macro releases due later today, including the industrial production, monthly GDP and trade balance.
Meanwhile, reduced calls for aggressive Fed rate cuts following the stronger US Non-Farm Payrolls (NFP) data continues to keep the US yields underpinned alongside the US dollar. The US dollar index trades near three-week highs of 97.59 reached in the US last session.
On Tuesday, GBP/USD fell to fresh six-month lows of 1.2429 after efforts to block a no-deal Brexit via a Northern Ireland Bill failed. The pound remains pressured amid looming Brexit/ UK political uncertainty, “with the Tory leadership vote slated to be settled by July 23, and front-runner Boris Johnson crowing over leaving the European Union on October 31, with-or-without a deal”, as reported by Reuters.
In the meantime, all eyes remain on the UK data flow heading into the key event risks, Powell’s testimony and the FOMC June meeting’s minutes due later in the NA session.
Levels to watch