- GBP/USD eases inside the 30-pip trading range after four consecutive days of declines.
- UK Chancellor Sunak said, “the economy will get worse before it gets better.”
- UK Health Secretary Matt Hancock signaled further activity restrictions.
- Political turmoil in the US, stimulus and vaccine hopes entertain traders amid a light calendar.
GBP/USD picks up bids near 1.3525 while heading into the London open on Tuesday. Even so, the quote remains sluggish inside a short-term trading range between 1.3500 and 1.3530 as comments from British policymakers suggest the worst isn’t over as far as the coronavirus (COVID-19) led economic challenges are concerned. Also, weighing the quote could be the US dollar’s upbeat performance although a lack of major data/events trouble momentum traders.
With the third national lockdown challenging the country that’s just left its multi-year-old friend, British Finance Minister Rishi Sunak warned UK’s Members of the Parliaments (MPs), on Monday, while saying, “We should expect the economy to get worse before it gets better.” Also on the same lines are comments from UK Health Secretary Matt Hancock who signaled further activity restrictions as the seven-day rolling average for UK Covid deaths reported daily has reached 926.
It should be noted that People arriving in England need negative tests to enter the country from Friday, per Sky News.
Against this backdrop, British Consumer Spending, as per the Barclaycard UK data, dropped to the biggest since June, -2.3% YoY, whereas UK BRC Sales Like-For-Like eased to 4.8% versus 7.7% prior in December.
On the other hand, US Congress members push for another voting on President Donald Trump’s impeachment amid fears of further geopolitical tension in the world’s largest economy. Alternatively, Fed policymakers from Dallas and Richmond stay cautiously optimistic for the second quarter of 2021 amid hopes of the Democratic party-led fiscal stimulus and overcoming the virus due to the strong vaccination drive in the UK and the US.
Amid these plays, stock futures in Britain and America flash mild losses while shares from Asia-Pacific trade mixed by press time.
Moving on, comments from Bank of England (BOE) policymaker Dr. Ben Broadbent can offer intermediate moves while risk catalysts, mainly concerning the virus and stimulus, may give clearer signals.
Technical analysis
A downside break of 21-day SMA joins easing RSI and bearish MACD to signal further weakness towards the upward sloping trend line from early November, at 1.3340 now. Meanwhile, an upside clearance of 21-day SMA, at 1.3538 now, will aim for a downward sloping trend line from January 04, currently around 1.3600.
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