GBP/USD: Mildly bid under 1.2500, UK Services PMI eyed
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GBP/USD: Mildly bid under 1.2500, UK Services PMI eyed

  • GBP/USD snaps two-day losing streak.
  • UK coronavirus-led death toll drops to the lowest since early-March but still could soon reach to Italy’s levels.
  • UK-US trade talks start today, could push the EU towards easing Brexit bias.
  • British PMI can confirm downbeat performance during April.

GBP/USD snaps two-day losing streak while flashing 1.2465 as a quote, up 0.15% on a day, ahead of Tuesday’s London open. Though, the pair’s recent pullback from the intraday high of 1.2469 seems to take clues from the nervous sentiment before the UK-US trade talks and the final reading of British Services PMI for April.

It should also be noted that the fears of the UK’s coronavirus (COVID-19) death toll to reach Italy’s levels, as per the CNBC, also weigh on the pair. The latest figures from the Department of Health suggest total fatalities reached 28,734 with the addition of 288 deaths as of 5:00 pm on Sunday being the lowest since March-end. Even so, CNBC cites fears of the death toll to rise to Italy’s levels while saying, “Given that the U.K. is seen to be a week or two behind Italy in its stage of the outbreak too, the death toll could be much higher.”

While identifying the fears of the pandemic, global policymakers and donors stepped forward on Monday. Multiple entities ranging from nations to the pop-star Madonna together pledge nearly $8bn (£6.5bn) in an online summit hosted by the European Union (EU) President Ursula von der Leyen.

Elsewhere, trade talks between the US and UK’s diplomats will begin today. As leaders of both countries share cordial terms, the trade deal is likely to generate a huge success. It should also be noted that the same can exert pressure on the EU to accept the Tory government’s Brexit terms, as per the market consensus. Recently, the US Chamber of Commerce said the US and UK should work to remove all tariffs and barriers to boost the long-term outlook for both countries.

Moving on, the final reading of the UK Services PMI for April is expected to confirm 12.3 initial estimations by being near 12.2, which in turn could act as an extra negative for the pair.

Hence, while the data and news flash mixed signals, GBP/USD traders remain cautious ahead of the active day.

Technical analysis

The pair bounces off a joint comprising 21-day SMA and a two-week-old rising trend line, which in turn propels the moves towards 61.8% Fibonacci retracement of March month fall, around 1.2515. However, a horizontal line stretched from April 14, close to 1.2640/45, could restrict the pair’s upside past-1.2515. Alternatively, an ascending trend line since April 07, 2020, at 1.2320, followed by a 50% Fibonacci retracement of 1.2300, could limit the GBP/USD pair’s declines below 1.2420 immediate support confluence.

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