GBP/USD: Drops for third day towards 1.2900 on chatters of UK’s national lockdown
|- GBP/USD reverses pullback from the lowest in two weeks while easing from 1.2939.
- More than a dozen area in the UK will have tougher activity restrictions, pressure mounts for national lockdown in England.
- IMF suggests easy money to Britain, Brexit talks keep dwindling around fisheries off-late.
GBP/USD declines to 1.2920 while heading into Friday’s London open. The pair earlier tried to snap the two-day losing streak while bouncing off 1.2880 to 1.2939. Though, fears that the coronavirus (COVID-19) resurgence will recall the UK’s national lockdown recently weigh on the quote. This ignores the US dollar’s latest corrective pullback amid a light calendar. Covid updates, Brexit news and the second-tier US data should be watched for near-term direction.
Virus woes ignore DXY consolidation…
ITV shares comment from the Tory government diplomats while citing the pressure to impose a national lockdown in England. The move, as spotted by the piece, takes clues from the recently rising COVID-19 figures as well as the update that two million people in West Yorkshire are moving into the highest level of coronavirus restrictions, as per the news. Also backing the government is the latest weekly surveillance report from Public Health England shows that the pandemic case rates in England are rising for all age groups except 10 to 19 year-olds.
While UK Prime Minister Boris Johnson-led army searches for the clues to combat the deadly virus and its economic impacts, the International Monetary Fund’s (IMF) managing director Kristalina Georgieva advises British finance minister Rishi Sunak to increase public investment and bolster welfare support for people who lose their jobs because of the crisis, as per Reuters.
Elsewhere, the British government refrains from backing down on the fisheries when it comes to Brexit negotiations with the European Union (EU). However, David Frost and the company also want progress in the talks. Hence, the deadlock continues to bore GBP/USD traders while praising the bears.
On the other hand, the US stimulus stalemate is also trying to fade the US dollar’s upside momentum. As a result, the US dollar index (DXY) steps back from the monthly high to revisit the sub-94.00 region.
Market’s risk-tone sentiment remains mildly heavy amid the continuation of well-known fears and cautious mood ahead of the US presidential election. The second-tier data from the UK and the US may entertain GBP/USD traders during the rest of the day while keeping downside pressure on the quote.
Technical analysis
Considering the normal RSI levels, the latest corrective moves may aim for the previous support line stretched from September 23, at 1.2971 now. Until then, a downside break of the 100-day SMA level of 1.2875 can offer immediate support to GBP/USD traders ahead of the monthly low of 1.2819 and then the 1.2800 round-figure.
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