- The pound falls sharply against the dollar and the euro.
- The cautious climate in the markets keeps the dollar firm, despite the drop in Treasury bond yields.
- GBP/USD eyeing 1.2000 again.
After Thursday’s bounce, GBP/USD resumed the downside and broke firmly below 1.2100. The pair is trading just below 1.2050, at two-week lows.
GBP/USD is posting a weekly drop of over 200 pips and is on track for the lowest close since March 2020 on this timeframe. The context of risk aversion, together with an easing in the expectations of monetary tightening by the Bank of England are thinking about the pound. Added to the above are the new uncertainties due to Brexit.
The dollar remains firm supported by the expectation of an aggressive rate hike by the Federal Reserve. DXY is up 0.25% and trading around 105.00.
Regarding data on Friday, the UK S&P Global Manufacturing PMI stood at 52.1, improving on the previous reading of 52.0. Going forward, the economic calendar highlights the publication of the final reading of the S&P Global PMI manufacturing index for June (consensus: 42), the manufacturing ISM (54.3) and the construction spending report.
If you continue to descend, next support for GBP/USD looms at 1.2025 and below that the focus will shift to the 1.2000 area. ORA daily close well below 1.2000 would point to further weakness ahead, exposing the June intraday low of 1.1933. To the upside, resistance appears at 1.2105, followed by 1.2135 and 1.2185. A rise above this last level would be positive for the pound and would give it important support.
Technical levels
Source: Fx Street
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