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GBPUSD Falls Below 1.20 As Greenback Maintains Upward Trajectory

FOREX
  • GBP was the clear outlier on Tuesday, sinking around 1.35% to its lowest level against the US Dollar since March 2020. Weakness was even more pronounced in the cross with EURGBP extending to 13-month highs just below the 0.8700 mark.
  • Cable’s move lower this week confirms a resumption of the primary downtrend and the next technical support point resides at 1.1934, the high on Mar 20, 2020. In similar vein, EURGBP has cleared resistance at 0.8619, the May 12 high and an important short-term bull trigger. The immediate focus is on 0.8701, the May 7 2021 high and 0.8721, the Apr 26 high.
  • Euro weakness was contained by the appreciation against GBP on Tuesday, however, a brief pop to 1.0485 in EURUSD was well sold into with the pair gravitating back to around the 1.0400 handle as we approach the APAC crossover.
  • With US yields at recent highs and equity benchmarks consolidating at the lows, the USD Index (+0.40%) looks set to post a fifth consecutive winning session. US May PPI came in basically in line with expectations, but a touch on the soft side for core readings and downward revisions to April – having very little impact on the greenback.
  • Overall, the greenback strength was broad based with not only the likes of AUD, NZD and CAD retreating but also weakness filtering through to CHF and JPY. USDJPY is making fresh 24-year highs above 1.3520 as of writing.
  • The Chinese Yuan bucked the trend with USDCNH seen 0.42% lower on Tuesday.
  • Wednesday will bring April data for euro area IP and goods trade and the final estimates of French inflation in May. On the US docket, May retail sales and June Empire Manufacturing are notable data points before the June FOMC decision/SEP and subsequent press conference with Chair Powell.
  • Central bank decisions from both the SNB and BOE are also due on Thursday.
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