- GBP/USD stands on the slippery ground, refreshes intraday low.
- Fears of a major virus outbreak, short on capacity to test covid symptoms weigh the quote.
- Tory MPs told to back Brexit trade deal next week amid progress in talks over fisheries, EU policymakers remain apathetic.
- UK’s final reading on Q3 GDP, US stimulus passage can direct immediate moves.
GBP/USD refreshes intraday low to 1.3380, down 0.52% on a day, during the three-day downtrend ahead of Tuesday’s London open. The Cable slumped to the lowest since December 11 the previous day before bouncing off 1.3188.
While the coronavirus (COVID-19) strain and no Brexit positives from the European Union (EU) can be termed as the major drawbacks for the Cable, the US dollar’s broad gains over the nearness to the covid stimulus also weigh the quote. Moving on, Sterling traders will keep their eyes on the passage of the US aid package and the final version of the Q3 2020 UK GDP for short-term direction. Though, major attention will be given to the Brexit and covid headlines.
Although major drug producers and the European Medicine Agency (EMA) assure no major threats from the fresh covid variant, over 40 countries have cut down UK travels and PM Boris Johnson is under pressure, per The Guardian, to recall the national lockdown. Also on the negative side are the chatters, backed by the Financial Times (FT), suggesting the UK may not have enough coronavirus test kits to meet surging demand in the coming weeks, according to an internal government document, as the new strain of Covid-19 sends cases soaring. “The forecast that demand could exceed 700,000 tests a day, when capacity currently stands at 650,000, was made before the effect of the new strain of Covid-19 was fully understood,” said the news further.
On the other hand, The Telegraph came out with the report indicating that the British Members of the Parliaments (MPs) are pushed to back the Brexit trade deal during the next week after UK PM Johnson shows readiness to compromise over fisheries demand. However, the EU diplomats were spotted saying, “there’s still a no from us.”
Contrary to the EU and the UK policymakers, the US Congress members are ready with the much-awaited covid aid package and the government funding. After crossing the House, the $2.3 trillion fund flow appeal has enough votes in the Senate to reach President Donald Trump’s desk.
Amid these plays, stock futures remain pressured whereas the US 10-year Treasury yields decline 1.3 basis points (bps) by press time.
While the confirmation of the initial Q3 GDP figures of 15.5% QoQ and the passage of US stimulus can probe the GBP/USD pair for now, pessimism over Brexit and the virus can’t stop the sellers for long.
Technical analysis
Unless breaking a three-month-old rising trend line, at 1.3190 now, GBP/USD remains on the bulls’ radar.
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