The GBPUSD pair is trading a bit above 1.2050 at the moment of writing, despite the latest bounce from the 1.1960 area. The US dollar entered a consolidative mode after staging a good reversal from ots two-week lows.
Markets remain in a risk-off mood amid looming recession fears while the UK leadership uncertainty also keeps the GBP bulls on the defensive. British PM candidate Liz Truss set out investment plans while candidate Rishi Sunak said on Friday that he would put the government on a crisis footing from “day one” of taking office.
There was a clear lack of direction for European markets yesterday, with a weaker US dollar helping to act as a modest support for stocks more broadly, except for the DAX which fell back on reports that Gazprom had reduced gas flows through Nord Stream 1 due to a turbine problem.
This move by Gazprom prompted European gas prices to spike higher and shifting the focus back to yesterday’s German IFO business survey for July which slipped to a two-year low, with the head of the Institute saying that the German economy is on the cusp of recession.
US markets also experienced an underwhelming session, having hit six-week highs last week there appears to be a reluctance to push things too much higher, as we gear up for a big week of earnings, with the Nasdaq taking the brunt of the declines yesterday, as today’s Fed meeting gets underway.
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