GBP/USD revisits sub-1.2900 area amid US dollar pullback
- GBP/USD repeats failure to cross 1.2900, stays near the highest since March 11.
- Brexit woes continue despite recently optimistic comments from EU’s Bariner.
- UK-US trade deal gets another boost, coronavirus EY Chief Economist warns that Britain might not recovery until 2024.
- Hopes of US fiscal stimulus increase as policymakers talk the deal.
GBP/USD snaps seven-day winning streak while declining to 1.2855, down 0.21% on a day, during the pre-London open on Tuesday. The Cable earlier refreshed the 4.5-month. Though, the latest US dollar pullback from over two-year lows seems to attack the major currencies. With the UK’s post-Brexit trade talks with the European Union (EU) and the US continues, not to forget American Senators' discussion over the next fiscal package, market players will keep eyes on the risk catalyst for immediate direction.
US policymakers had a ‘productive meeting’ on aid bill…
While nothing more negative is on the cards, the US dollar index (DXY) might have recovered from June 2018 lows as the White House Chief of Staff Mark Meadows cited a productive meeting with the House Speaker Nancy Pelosi. Early in Asia, Republicans proved right on expectations of $1.0 trillion package whereas chatters surrounding the expiration of jobless claims’ benefits also crossed wires.
Talking about the Brexit, the EU’s Chief Negotiator Michael Barnier expressed confidence at a closed-door meeting with member state envoys to the bloc last Friday that a new deal with Britain was possible, as per anonymous diplomatic sources cited by Reuters. Even so, a spat between France and the rest of the major bloc nations, concerning the fisheries suggests a bumpy road for the much-awaited trade deal. Also increasing fears of a no-deal Brexit are updates from the Financial Times (FT) suggesting the UK Prime Minister Boris Johnson’s most senior adviser, Dominic Cummings, leads the push for a light-touch regulatory approach by Brussels over state aid.
On the contrary, likely trade deal between the UK and the US gains additional momentum as Britain’s international trade secretary, Liz Truss tells America, “Time to let us sell you lamb and haggis.” The Times said, “Britain has upped the ante with the US over the terms of a trade deal by pushing for a ban on lamb and haggis imports to be lifted and warning that threats to slap tariffs on gin could derail talks.”
Elsewhere, the UK stopped released the coronavirus (COVID-19) for further checks from last Sunday. Further, talks of 87% drop in Britain’s hospitality industry sales in the second quarter (Q2) and warning by the Earnst and Young (EY) Chief UK Economist over the national growth also gained major attention. Additionally, the UK-China row extends with the dragon nation’s continuous criticism of the Tory government for following the US footsteps.
Given the lack of major data/events up for publishing, the GBP/USD traders may concentrate on the second-tier US data for fresh impetus. However, this doesn’t mean the qualitative risk catalysts will leave the driver’s seat.
Technical analysis
Unless the pair slips back below 61.8% Fibonacci retracement of December 2019 to March 2020 fall and 200-day SMA, around 1.2705-15, sellers are less likely to be fortunate. Meanwhile, an upside clearance of 1.2915 resistance line from March 13 will be a clear signal to attack 1.3000 threshold.