GBP/USD loses some of its shine after Powell comments

Fundamental backdrop

Some key comments from Powell:

• On the balance, it looks like some of the data are pointing to a slower pace of recovery. 
• Fed will maintain its current pace of asset purchases.
• Fed will not cut back on its emergency facilities for a very long time.
• Some of the high-frequency data showed recovery slowed in June.

Its was the last headline that seemed to have done the damage to EUR/USD and GBP/USD. The market is still extremely volatile but the dollar seems to do well as a safe haven when the recovery is threatened and in this case, there has been no change. The fact that the Fed are willing to use all their tools if the situation gets worse is also supportive. 

GBP/USD 1-hour chart

GB/USD has been trading much stronger in recent session as the USD capitulation continued. There have been many reasons to sell the USD including its nations handling of the COVID-19 crisis, upcoming election risks and the trade war with China. It seems that the greenback only strengthens when there is a threat to the risk markets. Looking at the chart below there is a clear channel formation that has been forming recently. There is a light internal trendline that could provide some support but the main support and resistance levels are the channel lines. The previous wave highs can be used as support levels and the next one is at 1.2950 and beyond that the psychological 1.29 level. 

Additional levels