BUZZ-COMMENT-Weak dollar papers over the cracks in GBP/USD


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.

For more click on FXBUZ

gbp 2 jul 15

(Andrew Spencer is a Reuters market analyst. The views expressed are his own)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.