The back end of this week will be key for GBP/USD with the latest BoE policy announcement released on Thursday and the closely-watched US Labor Report out on Friday. The BoE is expected to leave policy unchanged but governor Andrew Bailey may well hint at further dovish policy measures, especially QE, if the central bank believes that the economy needs another boost. COVID-19 continues to weigh on the UK economy and new cases of the virus continue to appear. There were 771 news cases on COVID-19 announced on Sunday, a gradual increase from the July 7 low of 352, and the government is already warning of new lockdown measures if this trend continues.
The US dollar made a fresh two-year low at the end of last week and while the greenback is trying to consolidate recent losses, there seems little in the way of any USD-positive news in the market. On Friday the latest US non-farm payrolls are expected to show the US unemployment rate moving lower – from 11.1% to 10.3% - and any marked difference will drive the short-term outlook for the greenback.
GBP/USD had a volatile Friday as month-end rebalancing saw the pair hit a multi-month high of 1.3170. The pair are now consolidating last week’s sharp gains around 1.3070 and trade may be thin ahead of the BoE meeting. The daily chart remains positive although a further pullback to the 1.2950 – 1.300 area cannot be discounted. Friday’s bearish shooting star candle suggests further consolidation in the short-term.
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GBP/USD DAILY PRICE CHART (JANUARY – AUGUST 3, 2020)
Reprinted from dailyfx, the copyright all reserved by the original author.
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