GBP/USD climbs above 1.2050 post US data, UK-EU Northern Ireland deal
GBP/USD is recovering some ground after hitting a daily low of 1.1921 as speculations for the Brexit deal struck in Northern Ireland grow, which could bolster the Pound Sterling (GBP) in the near term. In addition, worse-than-expected US economic data are a headwind for the greenback. At the time of typing, the GBP/USD is trading at 1.2052, above its opening price by 0.65%. Read More…
GBP/USD manages to defend and rebound from 200-day SMA amid a modest USD downtick
The GBP/USD pair defends a technically significant 200-day Simple Moving Average (SMA) on Monday and attracts some buyers in the vicinity of the monthly low. Spot prices stick to intraday gains, around the 1.1965-1.1975 region through the early part of the European session and for now, seem to have snapped a three-day losing streak. Read More…
GBP/USD: Further losses seen below 1.1870 – UOB
In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, GBP/USD is expected to accelerate losses on a break below the 1.1870 level. Read More…
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The pound sterling rallied above the psychological area of 1.2050 against the US dollar as the latest US economic data did not live up to expectations. The energy surrounding the British currency was increased by positive sentiment in the form of UK housing figures, Brexit talks and encouraging economic forecast from the BoE.
During the early European session, the sterling was seen rising in response to better than expected UK housing data. According to the Halifax House Price Survey, UK house prices rose 4.5% over the three months to January 2021. This was significantly higher than expectations of a 2.7% increase, providing a boost to the British currency.
Brexit headlines also helped rally the sterling higher. The UK and EU had agreed to continue with negotiations for the next four weeks despite difficult trade talks. The British government has been pushing for the EU to grant it favorable trade agreements, which may have opened the way for a ‘bare bones’ trade agreement. This could help avert a chaotic end to the transition period at the end of this year.
The upbeat forecast from the Bank of England (BoE) also added some fuel to the rally. The BoE left its policy unchanged and signaled a stronger recovery in the near term on the back of vaccine-led stimulus. The BoE chief remarked that the economy is likely to ‘shrink meaningfully’ in the months ahead, though the central bank remains confident that the overall recovery will remain solid.
In the US, data released overnight showed that the domestic economy is continuing to weaken. The August new home sales report showed a 3.5% drop in contracts compared to the same period last year. The US economic picture was further clouded by a worse than expected increase in weekly jobless claims.
Overall, the GBP/USD pair moved higher and has retaken the 1.2050 resistance level. The UK’s positive economic data helped propel the sterling higher; however, the real momentum came from weaker US data.
Going forward, the sterling will be looking for some guidance from the European Central Bank’s monetary policy decision on Thursday. Brexit talks will continue and could provide the currency with an added boost. For the near term, the sterling is likely to remain supported and could move towards the next significant resistance area at 1.2100.
