- GBP/USD stays well bid near 1.3410 after rising from 1.3356.
- US dollar’s drop to fresh 28-month low propels the pair.
- Chatters surrounding UK Chancellor’s Sunak’s likely tax-hike offer, Brexit woes gain a little audience.
- UK Manufacturing PMI, US ISM Manufacturing PMI will join the Brexit news for near-term direction.
GBP/USD bulls get a warm welcome after returning from the long weekend. The quote refreshes the year 2020 top while rising to 1.3410, currently around 1.3406, up 0.30% on a day, during the pre-London open on Tuesday. The Cable’s latest rally could be attributed to the US dollar’s broad weakness that drags the greenback gauge to the lowest since May 2018. Also propelling the quote could be the broadly optimistic markets even if headlines concerning Brexit and the UK’s November budget suggest pullback.
The Sun came out with the news indicating that the UK Chancellor Rishi Sunal can levy 5p fuel duty during his budget guidelines in November. While most Tories are against the move considering the coronavirus (COVID-19) pandemic, the diplomat justifies the need by spotting the government’s heavy spending to combat the deadly disease and various programs for public benefits. “A Treasury source said officials were also told to look at the impact of a double-digit increase as part of more extreme measures that could be used to raise funds. But a 5p hike was put in the “realistic” category of options,” said the update.
On the other hand, France accuses the UK of stalling the Brexit talks after British PM Boris Johnson blamed Brussels to push towards a no-deal departure. However, the Daily Mail’s news suggesting Tuesday’s EU-UK emergency talks in London keeps the pound buyers hopeful.
Talking about the virus, the UK death toll increased by two to total 41,501, and cases in hit 335,873 on Monday, per The Sun. Though, the last day to Government’s popular “Eat Out To Help Out” scheme may add some worries for the Tory leaders.
For the US, the odds of the stimulus keep increasing with Treasury Secretary Steve Mnuchin blaming House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer for the deadlock. Even so, the policymaker hints a solution by the next week.
Amid all these catalysts, the US 10-year treasury yields add two basis points (bps) to regain 0.71% whereas S&P 500 Futures defy the previous day’s pullback from the record top of 3,524.50 while taking the bids near 3,505 by the press time.
Looking forward, the second reading of the UK’s Manufacturing PMI is expected to confirm the initial 55.3 announcements while the US ISM Manufacturing PMI can rise to 54.5 from 54.2 prior. It should also be noted that the emergency Brexit talks can surprise markets and hence the pair traders require caution near the multi-month top.
Technical analysis
The bulls are well-set to question the December 2019 top near 1.3515 unless it slips below December 31, 2019, high surrounding 1.3285.
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