1June, 2020No Comments|| 2
The US Dollar dropped when the riots broke out from last week all the way up until the weekend. This was able to give other risk-on assets such as the GBPUSD a chance to improve on their status.
The Fate of the USD Amid ISM Data
While the USD has been hit pretty badly due to the riots, there is still a chance for it to recover. That is if the Institute of Supply Management or ISM data will not reach expected outcomes. When this happens, there will most likely be a need for safe haven assets wherein the USD is one of them.
However, this will most probably only trickle some movement as the investors are focusing now on the riots happening due to the businesses being badly affected.What traders and market participants should now look at is the development of the riots in various states for the medium term movement of the USD and the ISM data for short term. The Non-Farm Payrolls which will be released this week will also be in spotlight but movements will only take effect end of the week.
The GBP In Focus
Because the USD slipped lower, the GBPUSD was able to capitalize. However, things may change as the post Brexit EU-UK talks will continue this week. So far, the two sides are still playing the blame game as EU negotiator Michel Barnier claimed that the UK is not sticking to their commitments. Due to that, the EU has also hardened their stance on several important matters.
On the other hand, the UK is also strengthening its foothold by stating that the EU are not willing to strike a compromise. If there is no progress within the week, the GBP is expected to see some downward movement.
At the same time, the UK Chancellor of Exchequer Rishi Sunak may now be creating the plans for the emergency stimulus package set to be released in July. This will help boost the economy in the long term.
GBPUSD Technical Outlook
In the long term, the GBPUSD is still experiencing some downward movement in market structure although the price action has already smoothened. But in the short term, we can see a slight uptrend by looking at the lower timeframes.
Some important levels that we need to look out for are the 1.24790 level and the 1.20659 level as these ones are the ones that may stop GBP’s upward movement. But for those looking for a buy opportunity in the retracement, possibly 1.23511 and 1.23816 are levels to look at.
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