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  • GBP/USD print mild losses as greenback marks corrective pullback from multi-month low.
  • UK PM Johnson sounds cautiously optimistic amid vaccine hopes.
  • Democrats are so far leading the race to Senate with thin majority.
  • BOE rate cut clues in focus, UK Services PMI, US election results, China headlines will also be the key.

GBP/USD eases to 1.3609, down 0.10% intraday, while heading into London open on Wednesday. The cable bears the burden of the US dollar’s corrective pullback amid the Georgian election exit polls, not to forget the third lockdown concerns and increasing odds of the Bank of England (BOE) rate cuts. Even so, sterling traders keenly await US election results before the second readings of UK Services PMI for December and speech from BOE’s Bailey.

Nervous markets favor the greenback…

Although Joe Biden’s Democrats are gaining a good response in Georgian, per the latest exit polls, the lead over Republicans is too small to believe. Also, US President Donald Trump is preparing, with Vice President Mike Pence, to challenge the decision and adds to the risk-off mood. While nearly 90% of votes are already out, the final verdict is expected somewhere during lunchtime in the US.

Read: Georgia Election Update: Dekalb County cements one Dem in the lead, with 93% expected votes in

At home, The Times came out with the news suggesting a heavy inflow of the coronavirus (COVID-19) vaccines towards the UK expected in the next two weeks. This could be the reason for UK PM Boris Johnson to comments about reversing the activity restriction measures sometime during mid-February. Even so, the latest data suggest one in 50 infected by the virus in Britain, per The Guardian.

Elsewhere, China blocks the investigation concerning covid trace while being hammered by US President Donald Trump’s executive orders and the New York Stock Exchange’s (NYSE) plan to rethink over the delisting of three stocks from Beijing. It should also be noted that multiple detentions of Hong Kong’s activists added to the risk-off mood.

Against this backdrop, S&P 500 Futures drop 0.60% but FTSE 100 Futures gain 0.30% by press time. Further, stocks in Asia stay mostly negative while the US 10-year Treasury yields jump to the highest since March 2020 levels.

Moving on, Georgian results will be the immediate and the key catalyst to watch while UK Services PMI for December, expected to confirm 49.9 initial forecasts, can also entertain the Cable traders. It should be noted that the third lockdown and worsening virus conditions push the money market towards expecting the BOE’s ten basis points of a rate cut by August versus November previously. To ascertain the same, BOE Governor Andrew Bailey’s testimony before the Treasury Select Committee will be eyed.

Technical analysis

A two-week-old ascending trend line and 10-day SMA, respectively near 1.3595 and 1.3580, restrict the short-term downside of GBP/USD, which in turn direct the bulls to keep 1.3700 on the radar.