- GBP/USD bounces off six-week low to snap three-day downtrend.
- UK formally requests three months to overcome sales of sausages in Northern Ireland, unlock can be two week early.
- UK Chancellor Sunak rejects extra fiscal helps on delayed unlock.
- British Retail Sales for May, risk headlines become the key amid a light calendar elsewhere.
GBP/USD snaps three-day downtrend to early May lows while staying firmer around 1.3935 amid the initial Asian session trading on Friday. In doing so, the cable pair cheers mildly bid S&P 500 Futures as well as positive news concerning Brexit and the UK’s covid-led unlock.
With the UK’s hospitalization still below January’s record peak, odds of a two-week early unlock of Britain, as proposed by PM Boris Johnson can’t be ruled out. UK’s Daily Mail mentioned anonymous sources to say, “Lockdown could end two weeks early if Covid data continues to improve.”
Also positive for the GBP/USD prices could be the UK’s formal request of a three-month leeway to solve the sausage battle with the European Union (EU) in Northern Ireland (NI). The Guardian cites Britain’s readiness to guarantee the EU citizen voting right in local elections as the driver behind the request. The news said, “The Brexit minister, Lord Frost, has written to the EU with an official request to extend the grace period to 30 September for the sale of sausages produced in Great Britain in Northern Ireland supermarkets.”
It’s worth noting that the strong print of the UK’s Consumer Price Index (CPI) data has already strengthened odds of the Bank of England’s (BOE) tapering and hence today’s Retail Sales for May, expected to ease from 42.4% YoY to 29%, will be the key.
Elsewhere, global markets consolidate the Fed-led losses during a sluggish Asian session comprising no major catalysts. The reason could be traced to increasing odds of US President Joe Biden’s infrastructure spending. Even so, chatters over the threat on Chinese companies from Biden’s executive order probe the market bulls during a quiet day.
Hence, S&P 500 Futures snap a two-day south-run whereas the US Treasury yields also stabilize by the press time.
Looking forward, the UK’s Retail Sales will be the key event amid a light calendar elsewhere. However, chatters relating to the unlock, covid and Brexit will also be crucial for GBP/USD pair.
A clear break of 1.3965 support confluence comprising ascending trend lines from December and June 2020, favors GBP/USD bears even as the quote defends the 1.3900 threshold. It should also be noted that 100-day SMA near 1.3940 guards the corrective pullback. Meanwhile, a downside break of 1.3900 will aim for April-end lows near the 1.3800 round figure.