- GBP/USD rebounds around 65-70 pips from daily swing lows, around the 1.2880 area.
- Comments by UK Foreign Secretary Dominic Raab extended some support to the GBP.
- A modest USD weakness remained supportive ahead of the UK PM Johnson’s decision.
The GBP/USD pair managed to rebound around 65-70 pips from intraday swing lows and refreshed daily tops, around mid-1.2900s during the early European session.
The pair once again showed some resilience below the 1.2900 round-figure mark and attracted some dip-buying near the 1.2880 region despite persistent Brexit-related uncertainties. In the latest development, French President Emmanuel Macron warned that the UK should prepare for a no-deal Brexit unless the UK Prime Minister Boris Johnson backs down on fishing rights.
The negative headlines, to some extent, were offset by the UK Foreign Secretary Dominic Raab’s optimistic comments, saying that there was a Brexit trade deal to be done. This comes on the back of expectations that the UK Prime Minister Boris Johnson will announce an extension of trade talks with the EU later this Friday, which extended some support to the British pound.
On the other hand, the US dollar witnessed some selling amid signs of stability in the equity markets. The US President Donald Trump on Thursday offered to raise the size of a fiscal stimulus package to win the support of Republicans and Democrats. This, in turn, provided a modest lift to investors’ sentiment and undermined the greenback’s perceived safe-haven demand.
However, concerns that a steep rise in new coronavirus cases could hinder the global economic recovery might help limit any meaningful slide for the buck. This, coupled with renewed lockdown restrictions in the UK and the possibility that the Bank of England could introduce negative interest rates might hold the GBP bulls from placing aggressive bets.
Nevertheless, the GBP/USD pair recovered a part of the previous day’s losses as market participants now look forward to the UK PM Boris Johnson’s decision on whether the UK will walk away or continue Brexit talks. Apart from this, the US macro data will influence the USD price dynamics and produce some meaningful trading opportunities.
Friday’s US economic docket highlights the release of monthly Retail Sales figures, followed by Industrial Production data and the preliminary estimate of the October Michigan Consumer Sentiment Index. This, along with the broader market risk sentiment and incoming Brexit-related headlines, will provide some impetus to the GBP/USD pair.
Technical levels to watch
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