- Resurgent USD demand triggers further selling around GBP / USD on Tuesday.
- Mixed jobs data in the UK does little to impress sterling bulls or lift the pair.
- Investors await comments from US policy makers for a new directional boost.
The pair GBP / USD remains negative around the 1.3850 e region and has moved shortly after the release of the UK monthly job details. After falling to an intraday low around the 1.3820 region during the Asian session, the pair has managed to recover slightly, still under pressure.
The pair has not been able to capitalize on the good bounce of the previous day of around 60 pips and met with new sales on Tuesday amid the surge of new purchases around the US dollar. Investors remain optimistic about the prospects for a relatively stronger US economic recovery from the pandemic, which in turn continues to underpin the USD.
USD bulls have followed the signs of a slight deterioration in global risk sentiment and have ignored a softer tone around bond yields from the US Treasury Investors have become wary after the US, Canada, the UK and the EU, in a rare coordinated move, imposed sanctions on Chinese officials for human rights violations in Xinjiang, further benefiting the safe haven US dollar.
On the other hand, the British pound has been affected by the news on Monday that The European Union is ready to block Oxford-AstraZeneca’s vaccine exports to the UK. A significant shortage in vaccine supplies could derail the UK government’s plan to break out of the current lockdown, which has been seen as another factor keeping GBP bulls on the defensive.
The British pound has risen slightly after the latest UK employment report showed that the unemployment rate fell to 5% in February. This has been better than estimates that pointed to a modest rally from 5.1% to 5.2%, although it has been offset by a sharp increase in the number of people claiming unemployment-related benefits to 86,600 compared to the decrease of 20,800 the previous month.
The focus and attention now shifts to the joint testimony of the Fed Chairman, Jerome Powell, and the Secretary of the Treasury, Janet Yellen, on the quarterly report of the CARES Act before the Financial Services Committee of the House of Representatives. In prepared comments posted Monday, both Powell and Yellen reaffirmed the optimistic economic outlook for the US., supporting the prospect of additional gains for the dollar.
This, in turn, suggests that the path of least resistance for GBP / USD remains to the downside. Sustained weakness below the 1.3800 level will confirm the bearish bias and set the stage for an extension of the recent rejection drop from the key psychological 1.4000 level.
GBP / USD technical levels
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