GBP/USD struggles to retrace losses despite USD weakness
On Tuesday, the GBP/USD pair is having a difficult time taking advantage of the USD weakness as it continues to trade around its daily low. At the moment, the pair is at 1.3020, losing 0.3% on the day.
The cable seems to be the only currency that fails to gather strength against the greenback as the latest data from the U.K. hurt the expectations of a hawkish move by the Bank of England. After rising 0.3% in May, Consumer Price Index in the U.K. came in at 0% in June, missing the market consensus of 0.2% and easing to 2.4% from 2.6% on a yearly basis.
- UK CPI eases to 2.6% y/y in June, misses expectations
On the other hand, the selling pressure on the greenback remains uninterrupted in the second half of the day. The fact that the markets are losing confidence on the Trump administration's ability to deliver the important policy changes, such as the tax reform, after another failed attempt to pass the revised version of the health care bill, hurts the demand for the USD, which has been already under fire lately on dovish messages from FOMC members.
Today's data from the U.S. were largely ignored by investors and the US Dollar Index stays around its 14-month low that it set earlier in the session at 94.27. At the moment, the index is at 94.32, losing 0.63% on the day. The economic calendar won't be offering any data in the remainder of the session, and the pressure on the greenback seems like it's not going anywhere anytime soon.
- US: Builder confidence slips two points in July, remains solid - NAHB
Technical outlook
Despite today's retreat, the pair continues to float above the critical 1.30 handle and if it's able to close the day there, it could start recovering its losses from Monday and today. 1.3030 (Jun. 30 high) could be seen as the initial hurdle ahead of 1.3100 (psychological level) and 1.3185 (Aug. 18, 2016, high). On the downside, supports could be seen at 1.2930 (Fib. 23.6% retracement of 21 - 30 June upsurge), 1.2860 (50-DMA) and 1.2795 (100-DMA).
- GBP/USD: Downtrend appears mature – Westpac
- GBP/USD scope for a test of 1.3446/60 area – Commerzbank