- GBP/USD extends Tuesday’s corrective pullback from 1.3304.
- EU vows ‘final push’ in Brexit talks despite differences over fisheries, levels playing field.
- More parts of the UK will be under Tier 4 lockdown from December 24.
- US President Trump obstructs stimulus but House Speaker Pelosi stays ready to propel the paycheck amount.
GBP/USD eases from the intraday high of 1.3412, currently up 0.26% on a day near 1.3400, while heading into Wednesday’s London open. The pair recently benefited from the US dollar’s broad weakness as well as cautious optimism over Brexit talks. Even so, fears of a wider activity restriction wave in the UK test buyers.
ITV’s Robert Peston is optimistic over getting a Brexit trade deal while tweeting, “A UK source now says agreement on a UK/EU trade deal is again possible tomorrow.” The reporter also cites access to the 6-12-mile (offshore) zone, ocean fishing and the sanctions regime after the interim period of moving towards new quotas as catalysts favoring the solution to deadlock over fisheries.
On the other hand, Reuters quotes European Union Chief Brexit Negotiator Michel Barnier while saying, “We are really in a crucial moment. We are giving it a final push.” It should, however, be borne in mind that fishing isn’t the only problem. The bloc and Britain have differences over level playing field too.
As a result, chatters that Brexit deal may come as soon as Wednesday may cool down during today’s European session. Also likely to disappoint the buyers is the Telegraph news confirming speculations that the UK government had been mulling the idea that “swathes” of areas in the UK face being put in Tier-4 coronavirus (COVID-19) restrictions from Boxing Day.
Even so, fresh uncertainty over the US COVID-19 stimulus package and government funding, triggered by President Donald Trump, can keep the US dollar index (DXY) pressured, which in turn can help GBP/USD buyers for a while.
It should also be noted that US weekly Jobless Claims, Durable Goods Orders and Michigan Consumer Sentiment Index are extra catalysts to watch for the Cable traders.
Technical analysis
Not only the 21-day SMA, currently around 1.3400, the early-month high near 1.3540 also challenges the bull’s entries. Meanwhile, sustained trading below 1.3400 keeps 50-day SMA near 1.3230 and an ascending trend line from November 02, at 1.3210 now, on the GBP/USD sellers’ radar.
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