GBP/USD: Mildly offered near 1.3050 despite cautious optimism
|- GBP/USD struggles to keep recovery gains from intraday low of 1.3048.
- UK’s Brexit Negotiator David Frost cites odds of Brexit deal by September.
- British PM Johnson announces easing of lockdown restrictions despite scientists warnings.
- US Retail Sales will decorate economic calendar ahead of key US-China trade talks and Brexit negotiations.
GBP/USD stays depressed around 1.3055, down 0.08% on a day, while heading into the London open on Friday. The pair benefited from the UK’s trade-positive headlines and broad US dollar weakness the previous day. However, a lack of major directives and the coronavirus (COVID-19) concerns challenge the pair buyers even if UK PM Boris Johnson unveiled details of easing lockdown restrictions. Looking forward, traders will keep eyes on the US data amid an empty British line of economics.
In addition to the UK’s Brexit Negotiator David Frost’s comments suggesting a Brexit deal in September, British PM Johnson’s signal to the bloc for zero tariff quota deal also boosted the GBP/USD the previous day. Further, the Tory leader also tried to quell fears of Brexit while visiting Northern Ireland, which in turn helped keep upbeat trading sentiment. The EU and the UK negotiators will resume another round of Brexit talks from August 18.
Elsewhere, UK PM Johnson’s office rolled out guidelines to ease the virus-led lockdown restrictions. The move ignores warnings from the British scientists suggesting that the nation is ‘nowhere near' level of coronavirus immunity needed to prevent a second wave. It should be noted that the British announcement to put France on the “no go” list gains heavy criticism from the bloc member. On the other hand, US pandemic numbers have recently been doubted amid receding tests.
Market’s risk sentiment has recently been sluggish as the US and China flash mixed signals ahead of this weekend’s phase-one talks. While US President Donald Trump turns down having any friendly attitude, the White House Adviser Larry Kudlow tries to repay for the loss of confidence while citing China’s increased buying of agricultural goods.
Amid all these catalysts, stocks in Asia-Pacific and the US stocks future print mild gains whereas US 10-year Treasury yields stop the previous run-up around 0.71% by the press time.
Considering the lack of major data/events up for publishing from the UK, the pair traders will keep eyes on macro for intermediate clues ahead of the US Retail Sales figures for July. In doing so, any more Brexit-positive headlines, coupled with anticipated weakness in US Retail Sales, may favor the Cable bulls.
Technical analysis
While the current sluggish moves drag the pair towards 1.3000, its further downside will be curbed by a four-month-old support line near 1.2870. Meanwhile, 1.3130 and the monthly high near 1.3185 can entertain buyers before diverting them to March month top around 1.3200.
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