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Jul 07 - 01:55 PM

GBP/USD - COMMENT-Sterling Succumbs To JOLTS-Driven Dollar

By Paul Spirgel  —  Jul 07 - 10:42 AM

GBP/USD fell on Wednesday, as markets continued the somewhat contradictory rush into Treasuries while also reacting to strong U.S. job-openings data, both of which firmed the dollar and left cable vulnerable below its 10-day moving average.

The inability to regain the 10-DMA hints at further declines as traders sell into strength.
A fall below July 2's 1.3734 would open the way for a test of April lows by 1.3670 and GBP/USD's 200-DMA by 1.3662.

Though below forecast, the JOLTS data showed strong demand for workers as the economic reopening widens nL2N2OI1NV, stanching sterling's bid to lift off overnight lows below 1.3800 in a short-lived rise to Wednesday's high at 1.3842 in early U.S. trade.

Support below 1.38 has held in five of the last six sessions, with sterling anchored within the falling lower 30-day Bolli at 1.3704 and 10-DMA resistance by 1.3840.

Cable's 2021 outperformance is being tested by the Delta-variant COVID case spread, though sterling has still gained 1.8% versus the dollar over the past 6-months versus the euro's 3.8% loss and the yen's 6.6% fall.

Wednesday's Fed minutes present a key event risk.
A less accommodative tone could suggest Fed-BoE policy divergence, facilitating dollar strength, as the BoE loses two of its most hawkish voices with the departure of Andrew Haldane and Gertjan Vlieghe.

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GBP Chart: Click here

Source:
Refinitiv IFR Research/Market Commentary

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