July 15 (Reuters) - Sterling has been driven by the softer dollar in July, overcoming weak UK economic data and hard-Brexit fears. This suggests there is little reason to fight the dollar's weakness while risk appetite remains resilient.
The pound fell to a 1.2480 low on Tuesday as the UK's dire May GDP data undermined hopes of a V-shaped recovery . The dollar rode to the rescue, weakening broadly as Wall Street rallied on expectations of a strong U.S. economic rebound and hopes of a coronavirus vaccine, reinforced by late-breaking news that Moderna Inc's Phase 1 results showed their vaccine is safe and induces an immune response .
Wall Street leads risk appetite across markets, and remains resilient, ignoring the cautious Federal Reserve , major U.S. banks forecasting more economic pain , and little sign that the coronavirus is coming under control in the U.S. .
When logic fails, attention swings to the charts. Tuesday's downside failure inGBP/USD left a bullish hammer reversal on the daily candlestick charts, which would be validated by a close above Tuesday's 1.2563 high. If this happens, another test of formidable resistance around 1.2700 looks viable, being the July range high, upper 21-day Bollinger band, 76.4% of the June fall and the 200-day moving average.
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gbp 2 jul 15https://tmsnrt.rs/2Omwy6W
(Andrew Spencer is a Reuters market analyst. The views expressed are his own)
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