GBP/USD: Stays offered near one-week low with eyes on UK PM Johnson’s COBRA meeting

• GBP/USD holds lower ground below 1.3400, extends Friday’s losses.
• EU-UK fails to solve the Brexit riddle, fisheries, level playing field become the latest hurdle.
• Canada follows Europe, Turkey to ban flights from the UK as new strain of coronavirus spreads.
• UK PM Johnson calls for special COBRA meeting, EU Chairman of the Foreign Affairs Committee hints extended talks in 2021.

GBP/USD fades corrective recovery from the intraday low of 1.3336, currently down 1.0% intraday around 1.3360, while heading into Monday’s London open. While Brexit woes and the new strain of the coronavirus (COVID-19) have already weighed the Cable, the fresh US dollar strength amid stimulus hopes exert an additional downside burden on the quote. The pair traders currently await the government’s Cabinet Office Briefing Room (COBRA) meeting, up for Monday morning in the UK,  for fresh impulse.

Although London and Southeast England are already under Tier-4 lockdown, rumors over further activity restrictions in the special meeting chaired by UK PM Boris Johnson can’t be ignored. Even so, Reuters mention the motto as, “To discuss international travel and the flow of freight in and out of Britain.”

Also helping the GBP/USD bears is the deadlock over Brexit talks. While the European Union (EU) and the UK policymakers managed to cross some of the key hurdles during the last week, talks over fisheries remain the key to unlock the door to the Brexit deal. Also challenging the talks are the latest chatters over the level playing field.

On the other hand, US Congress members managed to pass the stopgap funding to avert a government shutdown. Capitol Hill also stands ready with the much-awaited COVID-19 stimulus.

Against this backdrop, stocks in Asia-Pacific join the US and the UK stock futures to print mild losses while the US dollar index (DXY) extends Friday’s recovery gains.

Looking forward, UK PM Johnson’s readiness for further activity restrictions, as well as no-deal Brexit if uttered, could keep the GBP/USD bears hopeful. Also likely to please the Sterling sellers could be the US dollar’s extended upside amid the formal announcement of the US aid package.

Technical analysis

A clear downside break of 200-HMA directs GBP/USD sellers toward 61.8% Fibonacci retracement of December 11-17 upside, near 1.3320, ahead of the mid-December low near 1.3280. Meanwhile, an upside clearance of 200-HMA, at 1.3407 now, need RSI recovery to regain the 1.3400 threshold.