- GBP/USD recovers from three-day low amid broad US dollar weakness.
- UK will release its mandate for the post-Brexit trade talk with the EU, British PM Johnson is widely expected to ditch Brexit WAB.
- BoE’s Cunliffe, US data and coronavirus updates will also keep traders busy.
GBP/USD bounces 23 pips, or 0.18%, off to 1.2932 while heading into the London open on Thursday. While the broad US dollar weakness is likely behind the latest pullback of the pair, the Cable traders await the mandate of the UK’s post-Brexit trade talks with the EU that will begin the next week.
The USD fails to hold onto the recovery gains marked Wednesday as broad declines of the US treasury yields and stocks push markets off the greenback. The widespread outbreak of the coronavirus outside China seems to be the underlying reason for the risk-off.
That said, the US 10-year treasury yields remain close to the multi-year low flashed the previous day whereas S&P 500 Futures lose 1.52% to 3,062 by the press time.
UK PM Boris Johnson is less likely to respect the EU’s “level playing field” as he has already signaled disrespect for the previous Withdrawal Agreement Bill (WAB). The BBC relies on Downing Street sources to say, “The rules of engagement agreed by Mr. Johnson last year had been superseded by promises made in the Tory manifesto on which he was elected in December. The Prime Minister believes he is within his rights to go back on previous agreements covering areas including borders, fishing rights and state aid.”
On the other hand, The Sun released news stating that the EU’s chief negotiator Michel Barnier urged the bloc’s member states to stick together in upcoming trade talks if they want to keep their international might.
Elsewhere, the UK-French fishers’ fight continues to garner major attention as this becomes the key for the British negotiations that aim to get Canada-style deal with the EU.
Additionally, BOE Deputy Governor Jon Cunliffe is also up for speaking in a panel discussion at the Barclays International Monetary Policy Forum in London. The policymaker earlier mentioned, “It is conceivable that global markets in London will shift to the European Union”. Hence, the traders will be on the lookout for any such signals for fresh direction.
Other than the qualitative catalysts, the US GDP and Durable Goods Orders could also help forecast the immediate moves of the Cable.
Technical Analysis
Sustained weakness below 50-day SMA level of 1.3030 keeps favoring the odds of the pair’s gradual decline to November 2019 lows near 1.2770.
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