GBP/USD Extends Its Recovery But Additional Gains Are Still Unclear

GBP/USD Current price: 1.3718

• UK’s Publish Sector Net Borrowing resulted in £22.02 billion in June, better than anticipated.
• Brexit tensions around the Northern Ireland Protocol keep increasing.
• GBP/USD extends its recovery but additional gains are still unclear.

The GBP/USD pair holds on to gains as Tuesday’s trading comes to an end, after reaching an intraday high of 1.3722 The pair advanced as the market’s mood improved, to the detriment of the American currency. The macroeconomic calendar was scarce in the UK, as the country published June Publish Sector Net Borrowing, which came in at £22.02 billion, better than expected.

Meanwhile, Brexit-related tensions persist. The EU rejected the UK’s demand for a new approach to the Northern Ireland Protocol. UK Prime Minister Boris Johnson said that there are practical steps they can take to do that, but it does not seem the Union will convene to any change.  On Thursday, BOE’s Broadbent is scheduled to speak.

GBP/USD short-term technical outlook

The GBP/USD pair holds on to intraday gains, trading near its daily high. However, its bullish potential is limited. The 4-hour chart shows that it stands above a bearish 20 SMA, while technical indicators are losing their bullish strength around their midlines. The longer moving averages maintain their bearish slopes well above the current level. The pair has a strong static resistance level at 1.3760, with additional gains possible on a break above it.

Support levels: 1.3675 1.3630 1.3580

Resistance levels: 1.3760 1.3805 1.3850

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