The GBP/USD currency pair has made a lot of headway as of late, trading above the 1.3500 level and around 1.3550 recently. The US Dollar is back under renewed selling pressure. This change comes on the heels of last month’s Retail Sales report, which was right in line with expectations. As the market digests these economic indicators, analysts are observing a broader trend of the US Dollar showing signs of weakness.
The US Dollar’s struggle is on display in its provided position in opposition to the British Pound. Fortunately, the recent Retail Sales data continues to paint a stable picture in the U.S. The general climate in regards to the Dollar has changed, bringing about an ideal setting for GBP/USD. After these developments, traders are now reacting to these dynamics which has sent the pair even deeper into positive territory.
The EUR/USD currency pair is as well under pressure from the recent economic data, still testing support below the 1.1700 level. Nonetheless, it’s still holding these daily gains, walking an incredibly tight line just above this key support hurdle. US Dollar basks in the return of a fourth of July trend. This paradigm change—which has been accelerated by the COVID pandemic—has left volatility in its wake for both currency pairs.
Running alongside currency volatility, gold has been in a range-bound $3,350 per troy ounce ceiling. On Friday, gold showed a very weak disposition, mirroring continued selling pressure on the US Dollar. While gold has benefited slightly from the US yield uptick across the curve, it is vulnerable to other macroeconomic factors.
The backdrop to this recent boom is the increasing trade tensions resulting from former President Donald Trump’s trade wars. Analysts caution that these tensions are almost certain to increase. Yet buoyant markets and a surprisingly resilient US economy hint at dangers lurking just around the corner. The US-China trade war, in particular, will soon cut global output by an estimated 0.7 percentage points in the medium term. This drop would have disastrous effects on the future of international trade and economic prosperity.
Overall, the financial landscape is shifting as market participants adjust their strategies in response to economic data and geopolitical developments. The US Dollar continues to weaken, and trade tensions deepen. This has made for an uncertain and complicated space for traders within the currency and commodity markets.