GBP/USD fails to recover losses on EUR/GBP upsurge
The GBP/USD pair, which fell to a fresh weekly low at 1.2932 during the first half of the NA session, tried to take advantage of the greenback weakness but lost its momentum before moving into the positive territory. At the moment, the pair was trading at 1.2975, losing 0.4% on the day.
Although the US Dollar Index plummeted to its lowest level in more than a year below the 94 mark on recent developments that ignited the political concerns in the U.S., the GBP/USD pair couldn't gather enough momentum to surpass the 1.30 handle. A recent report by Bloomberg claimed that Special Counsel Robert Mueller, who was warned by US President Donald Trump not to go beyond Russia in the probe, is looking to expand his investigation to include Trump's business transactions in Russia.
- US Dollar breaks below 94.00, fresh 2017 lows
On the other hand, ECB President Draghi's hawkish statements today, which strengthened the expectations for a QE tapering towards the end of the year, allowed the shared currency to rise sharply against its rivals, pushing the EUR/GBP pair to its highest level in more than 8 months at 0.8970 and hurting the overall market interest for the cable.
- ECB's Draghi flags QE tapering talks in autumn
Tomorrow's economic calendar won't be offering any significant data, leaving the pair at the mercy of its inverse correlation with the EUR/GBP pair in the short-term.
Technical outlook
With today's retreat, the pair is headed for its first daily close below the 1.30 mark in a week, suggesting that the bearish momentum could become sustainable. 1.2930 (Fib. 23.6% retracement of 21 - 30 June rise) could be seen as the initial support ahead of 1.2865 (50-DMA) and 1.2800 (100-DMA). On the upside, resistances align at 1.3000 (psychological level), 1.3050 (Jul. 19 high) and 1.3125 (Jul. 18 high).
- GBP/USD bearish near term – Scotiabank