- GBP/USD met resistance near 1.3100 and lost its traction.
- Concerns over rising coronavirus cases in the UK weigh on the GBP.
- US Dollar Index stays relatively calm near mid-93.00s on Tuesday.
The GBP/USD pair spent the Asian session moving sideways around 1.3080 and inched higher during the early trading hours of the European session. However, the pair lost its traction after peaking above 1.3100 and came under strong bearish pressure. As of writing, GBP/USD was down 0.37% on a daily basis at 1.3023.
GBP on the back foot ahead of BoE
The lack of progress in Brexit talks and resurfacing fears over a second coronavirus wave in the UK forcing shutdowns make it difficult for the GBP to find demand. On Monday, Britain’s health ministry reported that they have confirmed 938 coronavirus cases, which was the second-highest daily increase since early June. Currently, the total number of positive COVID-19 test results in the UK stands at 305,623.
On Thursday, the Bank of England will announce the interest rate decision and release its policy statement. Previewing this event, “we still expect the BoE to express caution over the highly uncertain economic outlook given the risk of further disruption from a second COVID wave, and the risk of another hit to growth later this year when the job furlough scheme expires in the autumn,” said analysts at MUFG Bank.
On the other hand, the greenback is staying resilient against its peers with the US Dollar Index posting modest daily gains above 93.50 and not allowing GBP/USD to stage a rebound. The ISM-NY’s Business Conditions Index and the IBD/TIPP’s Economic Optimism will be featured in the US economic docket on Tuesday.
Technical levels to watch for
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