GBPUSD TECHS: Bearish Theme

• It was a tale of two halves for the greenback on Tuesday as an initial extension of recent weakness USD index weakness to fresh cycle lows saw a solid recovery across the US session. Two key factors were at play here; the reversal higher for US yields from bearish extremes which was assisted by some stronger-than-expected US data and an important technical support holding for the DXY, a trendline drawn across the 2011 and 2021 lows.
• This dynamic prompted most G10 peers to erase early gains and slip into negative territory ahead of the APAC crossover. The Canadian dollar stands out here as an underperformer, falling 0.35% against the greenback. The likes of EURUSD and GBPUSD sit around 50 pips off their respective cycle highs.
• For EURUSD, it is worth flagging some interesting comments from ECB Vice President Luis de Guindos who told Bloomberg that the speed of the euro’s ascent is more worrying than its current level. Furthermore, De Guindos expressed the view that levels above 1.20 would provide a more complicated scenario. This may have helped EURUSD consolidate back below 1.18 today, while appetite for fresh EURUSD positions may be contained by the close proximity to this Thursday's US employment print.
• Yen volatility was notable, with an impressive 142.68-144.08 daily range. While dollar/rate dynamics were a primary driver of the day’s moves, it is worth noting the Q2 Japan Tankan survey painted a resilient picture and improved capex outlook, potentially providing an additional yen tailwind. As such, USDJPY remains 0.26% lower on the session despite the greenback turnaround.
• Wednesday’s data calendar is highlighted by Australian retail sales, Eurozone unemployment releases and US ADP. The focus then turns to US NFP and ISM Services data on Thursday, ahead of the July 04 holiday.

RRP usage retreats to $245.530B this afternoon from $460.731B yesterday (highest since December 31), total number of counterparties falls to 38 from 62. Usage had fallen to $54.772B on Wednesday, April 16 -- lowest level since April 2021.

When asked in Q&A at a visit of the "Alligator Alcatraz" detention facility, President Trump offered the possibility of arresting Mamdani, the winner of the New York City Democratic mayoral primary. 

• Q: Zohran Mamdani in his nomination speech said he will defy ICE and will not allow ICE to arrest criminal aliens in NYC. What's your message to communist Zohran Mamdani?
• Trump: Well then we'll have to arrest him. Look, we don't need a communist in this country, but if we have one, I'm going to be watching over him very carefully on behalf of the nation.