GBP/USD: Recovery attempt towards 1.3100 loses steam

The pound met fresh buyers ahead of the critical 1.3050 support, initiating another recovery attempt in GBP/USD towards 1.31 handle, although the bears continue to guard 1.31 fencing.

GBP/USD supported at daily S2 (1.3061)

Currently, GBP/USD now drops -0.37% to 1.3091, recovering from session lows hit at 1.3061 in the last hour. The recovery in the GBP/USD pair is characterized by some buoyancy seen around the London stocks, as markets continue to price-in a BOE rate cut next month, after BOE MPC member Weale turned outrightly dovish.

Moreover, renewed weakness in the oil prices also hampers the recovery in the higher-yielding currency GBP, with markets completely ignoring broad based US dollar weakness.

Meanwhile, markets continue to digest BOE Weale’s comment along with the news of some UK banks looking to impose negative interest rates to their customers. The immediate focus now shifts towards the UK mortgage approvals data ahead of the US macro news. While main risk event for the major remains the UK GDP and FOMC decision due tomorrow.

GBP/USD Levels to consider

The pair has an immediate resistance at 1.3125 (20-DMA), above which 1.3145 (daily high/ 20-DMA) would be tested. On the flip side, support is seen at 1.3050 (psychological levels) below that at 1.2997 (Jul 5 low).