- A combination of factors triggers some selling around GBP / USD on Tuesday.
- Covid-19 problems and Brexit nervousness continue to act as a headwind for the British pound.
- Optimistic expectations from the Fed prop up the USD and add to intraday selling.
- The market focus remains on the release of the latest inflation figures in the United States.
The pair GBP/USD has extended its steady intraday decline during the European session on Tuesday and has reached new daily lows around the region of 1.3850 in the last hour.
The pair has continued to struggle to find acceptance above the 1.3900 level for the second day in a row and found new sales on Tuesday, pressured by a combination of factors. The disappointing data released by the British Retail Consortium (BRC), along with covid-19 and Brexit issues they continue to act as a headwind for the British pound.
In fact, BRC’s similar retail sales posted 6.7% YoY growth in June versus consensus estimates for an increase of 24% and from 18.5% recorded in the previous month. Aside from this, a dispute over the size of the UK Brexit bill and the concerns about the new variant of the coronavirus They largely overshadowed the optimism led by the unlocking of the UK economy.
UK Prime Minister Boris Johnson confirmed on Monday that the COVID-19 restrictions in England will end on July 19, though he stressed the need for the public to remain vigilant. Johnson further stated that the pandemic still poses a threat amid looming fears of another major outbreak led by the highly contagious Delta variant of the coronavirus.
On the other hand, the US dollar has remained supported by expectations that the Fed is moving toward tightening its monetary policy ahead of schedule. Aside from this, a modest rally in US Treasury yields has further supported the USD. This, in turn, has been seen as another factor that has put some downward pressure on the GBP / USD pair.
Market focus will remain on the release of the latest US consumer inflation figures on Tuesday. Given that Fed officials have agreed on the need to be ready to act if inflation or other risks materialize, the data can offer clues as to the likely timing of reduced bond purchases and interest rate hikes. . This could provide a significant boost to the GBP / USD pair.
Technical levels to observe
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