Sterling's June downtrend has stalled in July, and the next move is likely to be driven by the USD or the success of Prime Minister Boris Johnson's daring move to lift England's COVID curbs, even as the Delta variant expands.
Any trending surprises in upcoming U.S. economic data, and the fight in the Senate over President Joe Biden's ambitious infrastructure package, will likely drive the next move in the dollar.
A period of range trading is viable, as negotiations on the package are drawn out nL1N2OO26K and markets retire for summer holidays.
Johnson is betting that the speedy vaccination programme will keep COVID-19 patients out of serious illness in hospital, though some medical experts are sceptical nL1N2OO0NP.
The UK economy is responding to easing lockdowns, and retail sales have surged nS8N2NS0E8, but the pivotal factor for sterling this summer will be the success of opening up.
Technically the daily charts show positive momentum studies, while 5, 10 and 21 daily moving averages conflict and 21-day Bollinger bands contract.
This is a neutral setup, which suggests a period of range trading.
The 1.3733 July low and 1.3930, 38.2% of the June-July fall, are viable short-term parameters. A sustained break of the nearby range top would target 1.4032/52, the falling upper 21-day Bollinger band and 61.8% of the June-July fall.
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