- GBP/USD prints mild gains while extending recovery moves from 1.3041.
- Fresh US dollar selling ignores fears of further hardships for the UK’s labor market.
- British PM Johnson determined to open schools in September, suspension over daily death data likely.
- Brexit optimism, UK-Japan trade talks and hopes of further stimulus favor the bulls.
GBP/USD picks up the bids near 1.3070, up 0.16% on a day, while heading into the London open on Monday. The Cable registered the biggest losses since June 24 on Friday. However, the US dollar’s failure to keep the latest gains recalled the bulls despite not so upbeat headlines from the UK. Looking forward, a lack of major data/events will keep the pair traders directed towards the key risk catalysts like Brexit, coronavirus (COVID-19) and the US traders’ reaction to President Donald Trump’s latest executive orders.
Following his notifications to stop doing business with TikTok and WeChat, not to forget sanctioning Hong Kong Leader Carry Liam, on Friday, American President Trump signed a few more executive orders during the weekend to unlock the stimulus. In doing so, the Republican leader not only allowed $400 unemployment benefits but also offered helps to people living in the rented house and also on student loans.
While the move helped the US dollar to extend Friday’s gains during the early-Asia, the recent news increasing odds of a stimulus deal among the US policymakers seems to have dragged the greenback off-late. As a result, the US dollar index (DXY) drops 0.09% to 93.32 by the press time.
On the other hand, British diplomats like Michael Gove and Rishi Sunak highlighted the odds of a Brexit deal by September without citing any strong shreds of evidence whereas fears of a larger job loss wave triggered following the study by a British institute. “The study by the Chartered Institute of Personnel and Development found the number of employers expecting to make redundancies had jumped from 22 percent earlier this year to 33 percent for the three months to the end of September,” per Financial Times.
Further, Japan is still talking trade with the UK even if denied on the push to recall auto tariffs before 2026. Elsewhere, British Prime Minister Johnson suggests reopening the schools in September while the UK Telegraph came out with the headline saying, “UK daily COVID-19 death count could be scrapped.”
Against this backdrop, the market’s risk-tone stays mildly positive with S&P 500 Futures gain 0.15% to 3,350 while stocks in Australia and New Zealand print welcome numbers. It’s worth mentioning that Japanese markets are off today.
Technical analysis
10-day EMA near 1.3030 precedes the 1.3000 threshold to restrict the quote’s near-term declines. However, bulls are less likely to find an easy roan unless crossing 1.3200 on a daily closing basis.
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