- GBP/USD awaits fresh clues while taking rounds to the weekly low, off intraday bottom recently.
- Coronavirus cases in the UK, the US refresh record high, British economy losses more momentum in September.
- Brexit signals keep being mixed, UK’s finance ministry can extend tax break to manufacturers.
- Downbeat statements from Fed’s Powell, RBNZ’s Orr emphasize Bailey speech.
GBP/USD bounced off intraday low while taking the bids near 1.3125 ahead of Friday’s London open. The sterling marked the heaviest drop in a month the previous day after the UK GDP data disappointed on the monthly basis. The bears then took clues from the Fed Chair Jerome Powell’s warning over vaccine hopes and mixed signals concerning Brexit. In doing so, BOE Governor Andrew Bailey’s rejection of negative rates, for now, coupled with optimism for Brexit got mostly ignored. Given the latest jump in the coronavirus (COVID-19) numbers pushing the central bankers from the US and New Zealand to step back from their previously upbeat comments, Bailey’s scheduled appearance at the UBS conference will be the key for the GBP/USD pair traders.
While joining the line of the record high COVID-19 cases in the US, over 150,000 on Thursday, the UK also refreshed the all-time peak of the pandemic infection numbers with 33,470 new cases the previous day. Britain also marked a slight improvement in the death toll from 595 to 563, per Reuters.
The pandemic is taking a toll on the economic activities amid the second national lockdown. Even so, BOE Governor Bailey welcomes the 15.5% Q3 GDP. To help the economy further, the Tory government is up for another boost, this time with an extension of the tax break.
Elsewhere, Irish PM pushes for smooth Brexit and so does the US President-elect Joe Biden while BOE’s Bailey anticipates, as per Reuters, “goodwill” after the transition.
On the other hand, Fed’s Powell tops the bulls expecting the vaccine to revive the economies. The same could be derived from the early-Asian comments by RBNZ Governor Adrian Orr. Additionally, news that the UK is considering sanctions on China over the breach of the Hong Kong treaty exerts an additional downside burden on the market’s risk.
Having heard cautious remarks from the US and New Zealand central bankers, the Cable traders will closely observe Bailey’s comments from the UBS conference, around 16:00 GMT. Should Bailey turns the course of his cautious optimism, GBP/USD will have additional reasons, then Brexit and covid, to extend the latest south-run.
Technical analysis
Although 10-day EMA stopped the pair’s further downside amid bullish MACD, the recovery moves are less likely to convince the bulls unless the quote rises past an upward sloping resistance line from September 10, at 1.3262 now.
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