- GBP/USD bounces off intraday low of 1.2723, stays inside 20-pips range since late-Wednesday.
- UK PM Johnson orders the army to plan for four major disasters including virus wave 2.0, shows commitment to strike deal with EU.
- China again warns UK on citizenship to the Hong Kong residents, Sino-American tension also contribute to risk reset.
- Speech from BOE’s Haskel, Johnson’s first visit to Scotland and US Jobless claims should be added to watch list.
GBP/USD picks up the bids from 1.2723, currently around 1.2735, while heading into the London open on Thursday. The pair flashed the least move on Wednesday in a week and the same fashion continues so far during the present day. While searching for the reason, changes in the market’s risk-tone sentiment and Brexit headlines join UK’s optimism concerning the coronavirus (COVID-19) could be traced as the key catalysts. Additionally, London-Washington combat with China and uncertainty over the US stimulus adds worries for the pair traders. Looking forward, a light calendar with a speech from BOE’s Jonathan Haskel and US Jobless Claims could offer an extension of range-bound session. Though, UK PM Boris Johnson’s first visit to Scotland, after being the national leader, could join Brexit news to keep the markets active.
In an attempt to mark its lack of fear from the British and American actions, the Chinese Embassy in the UK recently said that the nation’s citizenship pathway for Hong Kong residents violates international law. The Asian major’s recent retaliation could be in response to the US Secretary of State Mike Pompeo’s visit to London, for gathering support against China. The dragon nation also ordered the US Consulate to leave from Wuhan after America pushed Beijing Consulate office off from Houston.
Moving on, the UK Express reports that the Tory leader Johnson ordered the British army to prepare for four major disasters this winter which could simultaneously devastate the UK. The list includes COVID-19, Brexit, flu and flood catastrophe. Additionally, the British leader terms the nation’s response to the pandemic as “sheer might” of the UK union ahead of Thursday’s visit to Scotland, per the BBC.
Talking about Brexit, as per Reuters, Transport Secretary Grant Shapps said on Wednesday that the United Kingdom wants a Brexit free trade deal with the European Union but is prepared for a no-deal. On the other hand, British Prime Minister Boris Johnson’s spokesman said on Wednesday that the UK has not put a specific time frame on getting a trade deal with the United States (US).
On a different page, the US policymakers are jostling over the much-awaited fiscal plan with uncertainty over the extension of unemployment benefits and the size of the package giving the latest challenge to the risk-on mood.
Amid all these catalysts, US stock futures struggle to keep the previous recoveries while the Asia-Pacific equities dwindle amid off in Japan.
Traders may now keep eyes on the qualitative catalysts ahead of the speech from a BOE policymaker to gauge the odds of negative rates. Following that the weekly US Jobless Claims, expected to remain unchanged at 1300K, will be the key.
Technical analysis
GBP/USD fails to extend its rise past-200-day SMA breakout amid overbought RSI conditions. As a result, a downward sloping trend line from June 10, at 1.2765 now, becomes the key to watch. Meanwhile, a downside break of a 200-day SMA level of 1.2700 will recall 61.8% Fibonacci retracement of March month’s fall near 1.2520.
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