- GBP/USD fades Wednesday’s upside moves while easing towards the 1.3000 threshold.
- UK PM Johnson, top officials from Brussels blame each other for the Brexit deadlock.
- EU hopeful to extend Brexit talks beyond October 15 deadline, Johnson will make a decision today.
- OECD warns the UK over tax hike rumors as COVID-19 jobless become hard, virus woes keep pushing for the national lockdown.
GBP/USD declines to 1.3010 while extending the early-Asian pullback from the intraday top of 1.3029. In doing so, Sterling buyers mark cautious sentiment after Wednesday’s heavy gains ahead of Thursday’s London open. The underlying reason is today’s date, October 15, which carries the key European Union (EU) summit where the Brexit fate will be sealed.
Deal or no-deal? Does it matter?
Although UK PM Boris Johnson recently stepped back from leaving the Brexit trade negotiation table, Reuters cites EU officials pressing the Tory leader for a decision on the future relations. On Wednesday, Brussels and No10 alleged each other for the lack of progress in talks while also showing early signals to keep the chatters on. The key issues surrounding fisheries and the level playing field are the main barriers off-late. Though, many additional concerns favor the odds of a market shock. Though, UK PM Johnson is a wise man and may not take this harsh decision to end the Brexit talks with Australia or Canada style relations with the bloc especially at the time when the coronavirus (COVID-19) is hitting hard the nation.
Northern Ireland has called for stricter lockdown conditions whereas Wales is also calling for an entry ban in COVID-19 hotspots in the rest of the UK, per Reuters. The latest virus update suggests that Britain reported 19,724 new cases of COVID-19 on Wednesday, adding 2,490 cases on a day. Further details highlight 137 more deaths due to the deadly virus within 28 days of a positive test against 143 reported previously.
Amid the pandemic, the local lockdowns are losing importance and there are fears that Hospitals ‘not prepared to cope over the next six months’, per Sky News, which in turn makes today’s Brexit decision very important for the GBP/USD pair traders.
Additionally, the Organisation for Economic Co-operation and Development (OECD) recently said, as per Reuters, that Britain should do more to help the unemployed find work, and fixing the huge hole in its public finances can wait until recovery from the COVID-19 pandemic is well underway.
On the other hand, US Congress is still struggling over the much-awaited stimulus and fewer odds are favoring any deal of the aid package before the election. The same weigh on the market’s risk tone and keeps stocks futures, Treasury yields pressured.
Moving on, the two-day-long EU summit is a crucial issue whereas second-tier data from the US and updates of American COVID-19 stimulus can also offer direction to the pair.
Technical analysis
Sustained bounce off 50% Fibonacci retracement of June-September upside and 100-day EMA, around 1.2860/55, keep buyers hopeful to challenge the monthly peak surrounding 1.3085.
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