GBP/USD regains 1.2100, off seven-week low, as virus news show light at the end of tunnel
- GBP/USD recovers from multi-day low, still down for the sixth day in a row.
- Brexit pessimism, comments from BOE’s Haldane keeps bears hopeful.
- UK’s virus-led death toll registers the least increase in two months, business secretary claims 30 million vaccines by Autumn.
- Qualitative catalysts to remain dominant amid an almost empty calendar.
Having initially slumped to the lowest since March 26, GBP/USD bounces off to 1.2110, still down 0.09% on a day, while heading into the London open on Monday. While fresh claims concerning the no-deal Brexit and BOE’s readiness to act keep the pair pressured, recovery in the UK’s coronavirus (COVID-19) conditions seem to trigger the latest pullback. Even so, broad pessimism concerning the US-China tussle and uncertainty surrounding the virus can keep acting as the key catalysts amid a light calendar.
Not only the lowest virus death toll of 170 in two months but upbeat comments from Alok Sharma, the Business Secretary also suggests that there is a light at the end of the tunnel. “The UK would be the first country to get a vaccine, should trials be successful, and announced an extra £84 million in funding to accelerate research and production at Oxford and Imperial College,” said the diplomat as per the UK Telegraph.
While the news triggered the pair’s recent pullback, the Asian session wounds, due to the BOE and Brexit catalysts, are yet to be healed.
At the end of the third Brexit round, negotiators from the UK and the European Union (EU) conveyed disappointments and renewed fears of a no-deal departure. Adding to the pessimism could be the headlines from the Sunday Times suggesting that the senior government figures said the UK was preparing to “walk away” from trade talks with Brussels in the next month unless the EU gives ground.
Elsewhere, BOE’s Chief Economist Andrew Haldane signaled that the UK’s central bank is examining unconventional monetary policy measures more urgently amid the economic slump caused by the coronavirus pandemic, per the Bloomberg.
On the other hand, the US-China tension intensifies with words like “super-duper missiles” and “nuclear arsenal” used recently. Furthermore, the Fed tried to placate traders by turning down the negative Fed rate and expecting a “steady recovery” during the second half of 2020.
Markets’ risk-tone struggles for clear direction as the US treasury yields are mildly positive while stocks in Asia fail to follow the suit.
Looking forward, a lack of major/events on the calendar can keep virus updates, US-China tussle on the traders’ radar for near-term direction.
Technical analysis
A monthly falling trend line resistance, at 1.2261 now, checks the pair’s immediate recoveries, only a break of which can escalate the run-up towards a 50-day EMA level of 1.2415. During the pair’s further downside, 1.2000 psychological magnets followed by late-March tops near 1.1970 and 1.1935, could question the sellers.