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  • GBP/USD indicative levels suggest mild consolidation of gains.
  • EU-UK policymakers agreed on post-Brexit trade deal, the agreement needs verification from both the parliaments.
  • US President Donald Trump refrains from signing on stimulus bill, covid vaccine headlines also suggest cautious sentiment.
  • UK bank holiday can restrict market moves, American aid package, COVID-19 can entertain traders.

Early levels for GBP/USD suggest a mild gap-down to begin the week’s trading around 1.3570/75 during Monday’s Asian session. The cable stood positive near the highest since May 2018 by the end of last week’s trading as the European Union (EU) and the UK sealed the Brexit deal on Christmas Eve.

As per the broad view of the deal, the key hurdle fishing was tackled with the EU need to pay a sum of 25% for over five and a half years’ initial agreement. While other issues mostly met the market consensus, The Guardian cites fear of prolonged negotiations on trade and services while citing the UK’s proximity to its largest trading partner.

Reuters on the other hand said, “Leaving the EU’s single market and its customs union – an unprecedented act for a developed economy – will introduce new frictions to trade. Even with a deal, the UK’s Office for Budget Responsibility estimates this will lower UK GDP by about 4%.”

Even so, GBP/USD traders are relieved of immediate uncertainty as neither British nor the bloc’s policymakers are planning to stop the Brexit deal from passing the respective parliaments. While the UK is up for voting on the trade deal on December 30, the EU hasn’t clearly shared the timeline of voting. Even so, The Guardian mentions, “In the UK, Eurosceptic backbenchers are awaiting the verdict of a “star chamber” of experts convened by the European Research Group to go through the agreement line by line. It is expected to publish its conclusions on Monday. There is, however, no expectation that the deal will be rejected.”

On the other hand, US President Trump hasn’t yet signed the coronavirus (COVID-19) relief bill and government spending bill. While the paychecks have already stopped on Saturday, Trump’s refrain from signing the bill before Tuesday can recall the government shutdown.

It should also be noted that the COVID-19 fears are on the table amid the year-end celebrations. Vaccinations in some German cities have been postponed due to concerns over the transit of Pfizer-BioNTech shots, as cited by Bloomberg.

Moving on, global markets are likely to remain inactive amid the year-end celebrations and bank holidays in developed economies. Though chatters around US stimulus and covid headlines may entertain traders.

Technical analysis

Although 1.3620/25 area, comprising highs marked so far in December, tests GBP/USD buyers, sellers aren’t expected to plan entries unless witnessing a downside break of an ascending trend line from September 23, currently around 1.3210. Meanwhile, pullback moves can eye for September top near 1.3580.