GBP/USD struggles for direction near 1.3070 post-UK data

GBP/USD struggles for direction near 1.3070 post-UK data

• GBP/USD wobbles near 1.3070 following UK data on Tuesday.
• UK’s labour market results showed mixed results for the month of June.
• Focus now shifted to GDP figures, Industrial Production due on Wednesday.

The sterling is looking to add to Monday’s gains and is now taking GBP/USD to the 1.3070 region in the wake of results from the UK docket.

GBP/USD fades Monday’s advance

Cable fails to extend the positive note seen at the beginning of the week, slipping back to the 1.3070 region after briefly attempting to re-test the 1.3100 neighbourhood during early trade. In fact, the quid came under pressure after the unemployment rate stayed put at 3.9%, while the Claimant Count Change went up by more than 94K and Average Earnings plus Bonus contracted 1.2% during June. In the meantime, Cable’s upside momentum remains propped up by dollar weakness and the generalized better mood in the risk complex, relegating concerns over the progress of the pandemic and its impact on the UK economy as well as over the UK-EU trade negotiations. Later in the session, the NIESR GDP Estimate is due, while key UK GDP figures, Industrial Production and Trade Balance results are all due on Wednesday.

What to look for around GBP

The sterling seems to have entered into a consolidation phase following last week’s tops in levels just shy of 1.32 the figure. Dollar dynamics have mainly been behind the July-August rally, although a more convincing performance in Cable faces the usual risks associated with more domestic drivers, like the handling of the coronavirus crisis by the UK government, the impact of the pandemic on the economy, unabated Brexit effervescence and the neutral/dovish stance from the Bank of England (BoE).

GBP/USD levels to consider

As of writing, the pair is gaining 0.01% at 1.3072 and a breakout of 1.3185 (monthly high Aug.6) would open the door to 1.3200 (monthly high Mar.9) and then 1.3250 (2020 high Jan.2). On the other hand, the next support emerges at 1.2981 (monthly low Aug.4) followed by 1.2813 (monthly high Jun.10) and finally 1.2706 (200-day SMA).