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Jun 19 - 11:55 AM

GBP/USD - COMMENT-EU Aid Talk Cuts Some Sterling Losses, But Downside Risks Remain

By Paul Spirgel  —  Jun 19 - 10:35 AM

GBP/USD pared its losses, rising off its session low of 1.2361, after upbeat comments on the prospects for an EU recovery plan, but the pound remained mired in pessimism over UK fundamentals.
Public sector net borrowing data nB5N28S01F, which showed Britain's public debt greater than 100% of UK output, added another layer of uncertainty for sterling bulls.
Also, the optimism over the EU recovery plan nB5N28S01F came amidskepticism over negotiations between London and Brussels over a final post-Brexit agreement on trade ahead of the Dec.
deadline nB5N28S01E.
Euro buying through EUR/GBP limited cable's bounce, as the EU recovery plan optimism put a bid into the single currency. In U.S. trade, GBP/USD was on track for a close below the 30-day moving average at 1.2415, which would put the June 1 low of 1.2329 in sharper focus and set up a test of 1.2307, the 50% Fib of March's 1.3200-1.1413 dip.
Below 1.2307, May 18's 1.2075 would come into play and potentially open the way to a series of March lows on the way to the March 20 trough at 1.1413.

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Refinitiv IFR Research/Market Commentary


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