- GBP / USD gained strong follow-up traction for the second consecutive session on Thursday.
- Some transverse transmission force derived from a decline in EUR / GBP provided a good boost.
- A dovish USD price action continued to support the bullish move amid risk momentum.
- An unexpected jump in initial weekly unemployment claims in the United States failed to impress the USD bulls.
The pair GBP/USD It continued to climb higher in the North American session and climbed to new weekly highs, around the 1.3775 region in the last hour.
The pair built on the previous day’s solid bounce of more than 130 pips from levels below 1.3600 and gained strong follow-up traction for the second consecutive session on Thursday. The momentum lacked an obvious fundamental catalyst and could only be attributed to some strength driven by the crossover stemming from a sharp decline in EUR / GBP.
Aside from this, a generally positive tone in the equity markets acted as a headwind for the safe-haven US dollar and provided additional boost to the GBP / USD pair. On the economic data front, initial weekly US unemployment claims unexpectedly rose to 419,000 during the week ending July 16 from the prior week’s revised upward reading of 368,000.
That said, the resurgence of COVID-19 infections in the UK, coupled with the stagnation over the Northern Ireland Protocol to the Brexit deal, could limit gains for the GBP / USD pair. In fact, new cases have increased by more than 50,000 a day in the UK. On the Brexit front, the EU rejected the UK’s demand for a new approach to the Northern Ireland Protocol.
Meanwhile, the UK Prime Minister’s spokesman told reporters on Thursday that Johnson had spoken with the head of the EU Commission and urged the EU to consider the proposals seriously. Therefore, it will be prudent to wait for some solid follow-up buying before confirming that GBP / USD has bottomed out in the short term and positioning for any further appreciation moves.