GBP/USD : Soaring High
(Fri, 31 July 2020). Cable nears the coronavirus sell-off high at 1.3200. New COVID-19 cases in the UK hit a one-month high. The US dollar remains friendless and continues to probe lower in an attempt to find some level of support. The US dollar basket (DXY) is now trading at levels last seen in mid-May 2018 and has dropped 12 big figures since trading at 103.96 on March 22 this year. The fall in the USD continues, and as yet there is no support coming in to stem the move.
UK PM Boris Johnson continues to warn about a second COVID-19 wave, and the imposition of new regional lockdowns, with his concern borne out by the latest official data showing that 846 new cases were recorded on Thursday, an unwanted one-month high. Households have now been banned from meeting each other in a large part of North West England, due to non-compliance of lockdown measures, while Luxembourg has been added to the list of countries whose visitors need to quarantine for 14-days when visiting the UK.
Sterling remains flat to slightly better-bid across the board with the biggest move seen, unsurprisingly, in GBP/USD which is back above 1.3100 and at highs last seen four-months ago. The March 9 high at 1.3200 is now in play and this afternoon’s month-end portfolio rebalancing may provide the boost to see this level hit. Cable is overbought (CCI) but the recent series of higher lows and higher highs, along with the 20-dma moving through the 200-dma, confirms the strength of the recent move. US data out this afternoon should be closely watched as the greenback remains the driver of the move.
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