GBP/USD recovers modest intraday losses, flirts with 1.2600 mark amid fresh USD selling.

GBP/USD attracted some dip-buying on.Tuesday amid renewed USD weakness.A goodish pickup in the shared currency dragged the buck to a fresh monthly low.

The risk-off mood should limit losses for the greenback and cap gains for the pair.

The GBP/USD pair reversed modest intraday losses and climbed to the top end of its daily trading range, closer to the 1.2600 round-figure mark during the early European session.

Following a brief consolidation, the US dollar came under some renewed selling pressure and dropped to a fresh monthly low on Tuesday amid a goodish pickup in demand for the shared currency. This, in turn, was seen as a key factor that assisted the GBP/USD pair to attract some dip-buying near the mid-1.2500s, though the uptick lacked bullish conviction.

The worsening global economic outlook continued weighing on investors’ sentiment and triggered a fresh bout of global risk-aversion trade. This was evident from a sea of red across the equity markets, which should act as a tailwind for the safe-haven buck amid expectations that the Fed would need to take more drastic action to bring inflation under control.

Apart from this, the UK-EU impasse over the Northern Ireland protocol should hold back traders from placing aggressive bullish bets around the British pound. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the recent strong recovery move from the YTD low, around the 1.2155 region touched earlier this month.

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EUR/USD holds above 1.0700 despite weak EU PMI data

EUR/USD capitalizes on ECB President Lagarde’s hawkish comments early Tuesday and trades above 1.0700. The data from the eurozone showed that the business activity in the private sector expanded at a softer pace than expected in May. 

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