Market participants express cautiousness ahead of major events out of the United States
The cable refrains from decisive recovery attempts this week following a brief plunge below the 1.2000 mark witnessed last Friday. The pair has settled just above 1.2100 on Tuesday, struggling to challenge the 1.2180 intermediate barrier on the way to the descending 20-DMA, today at 1.2230.
At that, the US dollar remains apathetic these days, oscillating around the 105.00 figure in muted trading. Market participants express cautiousness ahead of major events including the FOMC meeting minutes and the US jobs market data due later this week. On the upside, the buck needs to make a decisive break above the 105.25 zone in order to retarget multi-year highs seen last month around 105.80.
GBPUSD looks directionless amid pessimism surrounding Brexit as EU ambassadors criticized a vote by MPs in the House of Commons to pass a bill that would allow the UK to alter elements of the Northern Ireland Protocol. Also, the pound is pressured by the Bank of England’s cautious tone on hiking interest rates as the UK economy shows signs of weakness.
Against this backdrop, another drop below 1.2000 could be expected in the near term after a short-lived consolidation phase. However, the pair would need solid strengthening in USD demand to derail long-term lows seen around 1.1930 in mid-June. On the upside, a decisive break above the mentioned simple moving average would indicate that the weak phase has come to an end.
The nearest risk event for the pair would be the FOMC meeting minutes on Wednesday. Should the central bank disappoint USD bulls by a less hawkish tone than expected, the GBPUSD pair may strengthen, but the sellers on rallied could prevent the pound from a sustained bounce eventually.
