A bit of risk-taking has tempered the demand for the safe-haven dollar in the last few sessions.
Will the risk-friendly environment be enough to push GBP/USD to a key inflection point?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist talked about pandemic fears/lockdown protocols likely dragging EUR/GBP to a key support level. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Latest weekly jobless claims fall to 684,000, lowest since pandemic began
- U.S. Congress approves extension of small business Paycheck Protection Program
- Fed’s Clarida says $1.9 trillion stimulus package isn’t inflationary over long-run
- Fed’s Evans sees first rate hike in 2024, inflation will be the test
- Fed lifting limits on bank dividends and share repurchases
- Tokyo core consumer prices fall at slower pace in March
- Asian shares rebound, U.S.-China tensions overshadow economic optimism
- Germany to impose quarantine on travelers from France- sources
- EU says on track for 70% of adults vaccinated in second quarter
Upcoming Potential Catalysts on the Economic Calendar:
- EU Summit ongoing
- Germany’s IfO business climate at 9:00 am GMT
- U.S. core CPE price index at 12:30 pm GMT
- U.S. personal income and spending at 12:30 pm GMT
What to Watch: GBP/USD
Better-than-expected U.S. jobless claims data and a bit of end-of-month shenanigans erased some of the dollar’s weekly gains against its riskier counterparts.The risk-friendly environment translated to a 100-pip bounce for GBP/USD, which is now trading just under the 1.3800 major psychological handle.
As you can see, 1.3800 also lines up with a 38.2% Fib retracement and a previous support level on the 4-hour time frame.
If market bulls continue to price in a slight recovery of the U.K. retail sales, then Cable could hit the 1.3800 MaPs near the 38.2% Fib. Heck, it might even hit the higher Fib levels closer to the 100 SMA if we see enough upside momentum!
Meanwhile, a return to risk aversion ahead of the weekend could drag the pound lower before it hits the more interesting retracement levels. Watch out for fresh downside momentum, which could pull GBP/USD to new March lows faster than you can say “Suez Can-not!“