GBP/USD pulls back from one-week high amid Brexit/coronavirus pessimism
|- GBP/USD fails to hold onto the previous day’s run-up.
- Spreading coronavirus in Europe and the uncertainty surrounding the UK-EU Brexit talks keep the pair under pressure.
- A light economic calendar keeps markets focused on qualitative catalysts.
GBP/USD declines to 1.2987 while heading into the London open on Wednesday. In doing so, the clouds over Brexit and coronavirus are keeping the cable under pressure.
Following the European Union’s (EU) 46-page mandate of post-Brexit trade talks with the UK, the British ministers are also ready to flaunt their moves on the key demand that will be put forward the next week. However, the final wording from Britain will be out on Thursday.
In its mandate, the EU keeps the tough standards on the regulations and trade rules while also turning down the UK PM Boris Johnson’s Canada-style trade deal.
On the other hand, the UK’s list of agenda is likely to be more concentrated around the free-Britain and could keep stretching the Brexit negotiation period beyond the predetermined December 31, 2020.
In addition to the Brexit pessimism, the coronavirus fears have also weighed on the Cable due to the fast-spreading of the deadly virus inside the bloc. To protect against the same, the UK Governments stands ready to close down the school and ban travel while also protecting people.
Additionally, a landmark review by Professor Michael Marmot, cited by the Independent, mentions that the life expectancy has fallen for the poorest women in England. The report also found an increase in health inequality in England linked to rising poverty, education cuts and insecure zero-hours contracts. This has put additional pressure on the UK PM Johnson while he is busy preparing for the Brexit.
Even so, the market’s risk-tone pulls back with the US 10-year treasury yields and the S&P 500 Futures recovering the latest losses.
Technical Analysis
50-day SMA near 1.3030 acts as the immediate resistance ahead of the two-week top near 1.3070 and the monthly high around 1.3200. On the downside, sellers will look for entry below 1.2960 to aim for the sub-1.2900 area.
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