GBP/USD: UK Dynamics Shake Bears Close to 1.2100

The GBP/USD currency pair is revolving around 1.2100 while traders grapple with direction. This is coming in the midst of reduced catalysts in the UK. There is also a pullback in the US Dollar recently.

US Independence Holiday and the Pressure

Bears of the Cable pair are catching their breath around a two-week low on Monday. The US Dollar index is still heavily pressured close to 105.00. This comes after it refreshed the two-week high the day before. 

The latest consolidation around the Dollar index might be connected with the Independence holiday. The market is equally getting ready for the major events of the week. These include the FOMC minutes publication and the US Jobs report for last month.

GBP/USD currency pair. Source TradingView

Rumors around plans to unseat the UK PM are weighing heavily on the GBP/USD pair. The UK Telegraph reported that opposition members will try a new move. They might upturn the Committee rules of 1922 to effect the leadership change.

The British Chamber of Commerce also recently released a new survey. It ran the survey among 5,700 companies between 16th May and 9th June. 54% of them are expecting their turnover to jump in the next twelve months.

This has come down from the 63% figure in the last survey it carried out. It is also the lowest expectation since the latter part of 2020. At that time, a lot of businesses were stifled by COVID rules.

The survey report added that companies in Britain have a gloomy outlook. This is intensified by the increasing inflation and stagnant investment plans.

It should be noted that the US Dollar measure renewed the multi-day high on Sunday. The US reports had pushed the recession troubles forward. 

More Index Reports

That said, the Manufacturing PMI for last month dropped to its lowest in two years. It fell to 53.0 against the expected 54.9 and the prior figure of 65.1. The details show the employment index dropping to 47.3 from 49.6.

The report also shows the new order index dropping to 49.2 from 55.1. The price paid index also experienced a drop from 82.2 to 78.5. This is against the 81.0 forecasts. 

The S&P Global Manufacturing Index for last month fell to the lowest since July 2020. It came down to 52.7 against the estimated 52.4 and the May figure of 57.

In addition, a factor that favored the US Dollar is Russia’s control of Lysychansk. There are also concerns if China can regain its economic transition. We should not overlook the COVID concerns from the Anhui province of China.

Against this, the US ten-year yield had its biggest fall in the week since February. The benchmarks on Wall Street contended for clear direction following the gains on Friday. The S&P 500 futures lost 0.5% to show the risk-off condition as of press time.

An absence of a major event might clip the GBP/USD pair. But the risk-off condition and negative reports from the UK might give hope to bears.