- GBP/USD fails to extend Friday’s upside momentum despite staying above 1.3020.
- UK PM Johnson up for Australia-style trade deal if there’s no deal by October 15, pushes Germany to bridge the gap.
- Stricter virus-led lockdown conditions will be announced by the PM for tier-3 hotspots.
- BOE’s Bailey will speak at a virtual Citizens’ Panel Open Forum.
GBP/USD wobbles around 1.3030 while heading into the London open on Monday. In doing so, the Cable steps back from the five-week high flashed on Friday. While the US dollar remains pressured, fears of a no-deal Brexit and the economic burden of the coronavirus (COVID-19) keeps the quote depressed near a multi-day high. As a result, traders will look forward to hearing from BOE Governor Andrew Bailey and UK PM Boris Johnson for fresh impetus amid the US holiday.
Brexit woes, virus worries probe Pound bulls…
Neither the European Union (EU) nor the UK wishes to step back on any of their strong points and yet want a successful Brexit. This leads to another failed round of talks during the last week, with fisheries and level playing field be the latest spoiler. As a result, the British government only has one week before the proclaimed deadline of October 15.
While identifying odds of no-deal Brexit, UK PM Johnson have started talking to the bloc leaders and asked German Chancellor Merkel, the current regional chief, to help ease the tension of a hard Brexit. Additionally, Reuters suggests that Britain’s government on Sunday urged businesses to prepare for the end of the Brexit transition period, saying that they need to take action whether or not a trade deal with the European Union is clinched.
On the other hand, the surge in the virus numbers, recently to 590,000, exerts immense pressure on the Tory government’s “no national lockdown” motto. While trying to safeguard the same, Boris Johnson is up for announcing stricter activity restrictions for the tier-3 states, the majority of North England, on Monday. While spotting the same, The Sun said, “Hotspots place in “Tier 3” could face new tough measures for up to six months.”
Elsewhere, US President Trump’s U-turn on stimulus couldn’t lure House Democrats as they still reject the $1.8 trillion proposals. Hence, the battle for the much-awaited American aid package is likely to continue and may stretch beyond the next month’s US presidential election, which in turn weighs on the risks and stops the US dollar from further declines.
Amid all these catalysts, S&P 500 Futures print mild gains whereas stocks in China benefit from the People’s Bank of China’s (PBOC) weekend moves. Further, Asia-Pacific shares also print small gains following equities in Beijing.
Looking forward, the UK PM Johnson is to speak with the regional leaders of the north about the stricter COVID-19 rules. The announcement will be watched for knowing the threat to the national lockdown. Further, BOE’s Bailey will also be closely followed to reconfirm his recent cautious optimism. It should be noted that the absence of the US traders will restrict today’s market moves unless any major update pop-up.
Technical analysis
The bulls may wait for a clear break of an ascending trend line from September 16, at 1.3055 now, before confirming the further upside towards the early August top around 1.3185. On the contrary, 50-day SMA, near 1.3025, holds the key for GBP/USD sellers’ entry, targeting the 1.3000 threshold.
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