GBP/USD remains vulnerable near monthly lows, just above mid-1.2200s
- GBP/USD remained under some selling pressure for the fifth straight session on Tuesday.
- Fears about increased UK public spending, Brexit uncertainties took its toll on the pound.
- Coronavirus jitters benefitted the safe-haven USD and further contributed to the downtick.
- The set-up support prospects for a further near-term depreciating move to sub-1.2200 levels.
The GBP/USD pair edged lower through the early European session and was last seen trading near the lower end of its daily trading range, around the 1.2260-65 region.
The pair failed to capitalize on the overnight bounce of around 50 pips from monthly lows and Tuesday's early uptick to levels beyond the 1.2300 mark, instead turned lower for the fifth straight session.
The British pound remained depressed amid doubts over Britain’s ability to pay for a massive boost to public spending. The worries surfaced after the UK Prime Minister Boris Johnson promised to double public investments.
This comes amid persistent Brexit uncertainties, which coupled with weaker UK macro data took its toll on the sterling. The final report of the first-quarter GDP showed that the economy contracted by 2.2% QoQ as against 2.0% estimated.
On the other hand, the US dollar drove some haven flows as investors remain concerned over the continuous rise in the number of new coronavirus cases globally, which might trigger renewed lockdown measures to contain the spread.
The GBP/USD pair has now moved well within the striking distance of Monday's swing low, around mid-1.2200s, below which the downward trajectory could get extended towards sub-1.2200 levels, marking the lower end of a near three-week-old descending channel.
Moving ahead, market participants now look forward to the US economic docket – featuring the release of Chicago PMI and the Conference Board's Consumer Confidence Index. This followed by the Fed Chair Jerome Powell's testimony might produce some meaningful trading opportunities.
Technical levels to watch