GBP/USD bounces off six-week low, focus on Brexit headlines, US NFP
- GBP/USD recovers from the year 2020 bottom amid the pre-NFP trade bleak.
- EU Fishermen’s worries, likely economic toll on the key members show the region is actually having a lower hand in Brexit talks.
- Domestic politics trying to defame the Tories, but have a little impact so far.
- Risk reset in place amid renewed fears of China’s coronavirus.
GBP/USD registers mild gains of 0.10%, currently around 1.2940, while heading into the London open on Friday. The pair dropped to the multi-day low on Thursday amid broad US dollar strength but bounced off-late amid risk-reset, Brexit positive headlines.
A report by insurance company Atradius stated that the end of the EU transition period at the end of the year is set to have detrimental consequences for EU member states. The report also cited the chances of bankruptcies of Ireland, Belgium and the Netherlands.
Not only fears of fall of the key EU economies but immense pressure from the coastal EU states also increase the odds that the region will offer softer terms to the UK when they’ll be on negotiation table during early March. News that the country’s retailers saw their sales jump to the highest level in six years in January also contributed to the Cable’s recovery.
With this, traders ignored allegations on the UK PM Boris Johnson for 'cronyism' while nominating Members of the Parliaments (MPs) for peerages. It should also be noted that some of the EU still hold the head high and want tough cooperation from the UK.
Elsewhere, markets are witnessing the pre-NFP dull trading session. Even so, risk-tone bears the burden of fresh fears that the coronavirus will have a longer-lasting impact on the global economies than earlier expected. With this, the US 10-year treasury yields snap the previous two-day winning streak while Asian stocks also weaken.
Traders are now looking for fresh details to keep the recent Brexit optimism. However, major attention will be given to January month's employment data from the US mainly due to the recently upbeat early indicators and the US dollar strength.
Technical Analysis
Sellers look for entry below 100-day SMA, now around 1.2900, to target November 22, 2019, low near 1.2820. On the contrary, buyers will stay away unless the pair manages to cross a 21-day SMA level of 1.3045.