GBP/USD: Mildly bid above 1.2300 as UK enters Sino-American rivalry
|- GBP/USD probes intraday high after bouncing off 1.2308.
- UK increases changes for China’s Huawei, offers citizenship to Hong Kong residents.
- EU’s Trade Chief says UK may have given up on Brexit deal.
- US President Trump’s conference will be the key.
GBP/USD buyers attack the day’s top around 1.2330 while heading into the London open on Friday. The Cable recently gained bids as the US dollar stays pressured near two-month low amid the US-China tussle. Also joining the drama is the UK who fired shots against China and showed care for Hong Kong citizens. Markets are now waiting for US President Donald Trump’s conference on China while American statistics might offer intermediate moves.
Following its earlier brake on China’s Huawei, the UK seems to ally to raise hardships for the Asian major’s tech firms. Additionally, the British policymakers tried to put fuel in the Hong Kong protests by easing the rules for UK citizenship for the Asian nation’s British passport holders. With these steps, the Tory government joins the Trump administration in combating versus Beijing.
On the other hand, US President Donald Trump has finally announced a conference on China's issue after signaling further sanctions earlier in the week. In response, the dragon nation said to retaliate without giving details.
Elsewhere, the UK’s business confidence hit its lowest since the 2008 Global Financial Crisis (GFC), as per the latest survey conducted for Lloyds Bank. Further, the BBC suggested no British car manufacturing in April.
It’s worth mentioning that the path of Brexit also gets tough with the EU Trade Commissioner Phil Hogan suggesting the UK may have given up on the deal, as per Bloomberg. Additionally, British PM Boris Johnson is also under pressure for the mishandling of the coronavirus (COVID-19) actions.
Against this backdrop, the market’s risk-tone as suggested by the US 10-year Treasury yields and Asian stocks remains mostly downbeat since the day’s start.
Looking forward, the US activity and consumer confidence figures might offer intermediate moves but the key for short term direction will be US President Trump’s conference at 18:00 GMT.
Technical analysis
Thursday’s “inside day” candlestick formation limits the pair’s immediate recoveries around 1.2355, a break of which can push the bull towards a 50-day EMA level of 1.2370. Alternatively, a daily close below the immediate support line, at 1.2235 now, might recall Friday’s low around 1.2160 ahead of targeting the monthly bottom near 1.2075.
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