GBP/USD refreshes two-week low as sellers attack 1.3500 amid US dollar strength
|- GBP/USD drops for the fourth consecutive day, flirts with multi-day low off-late.
- UK’s covid figures hover around record top, government rolls up for more vaccinations.
- British Chancellor Sunak may delay tax hike, Brexit drags UK below US in global business location ranking.
GBP/USD grinds lower amid the broad US dollar strength and risk-off mood, backed by the coronavirus (COVID-19) woes and the US-China tension. Sellers attack December 30 lows below the 1.3500 threshold, currently down 0.51% intraday near 1.3493, while heading into the London open on Monday. Given the light calendar, risk catalysts can keep the driver’s seat and weigh on the cable unless US stimulus hopes regain market attention.
Despite boosting immunization drive to reach the 200,000 shots per day target, backed by the freshly opened seven centers in the UK, fears of the covid and its strains can’t let the cable buyers come back. While Japan recently mentioned four cases of virus variants found in London, Reuters suggests record-high figures of the pandemic. “More than 81,000 people in Britain have died within 28 days of receiving a positive COVID-19 test, the fifth-highest official death toll globally, and over 3 million people have tested positive,” said the news.
It should be noted that Brexit woes are also weighing on the sterling as the nation struggles with the third lockdown. Truck riders and fishermen are recently disappointed. During the last week, the Bank of England (BOE) Governor Andrew Bailey conveyed his dislike for the Brexit deal.
Bloomberg also had news suggesting Brexit woes. The update suggested, “Britain is significantly less attractive as an international business location because of Brexit but remains well positioned compared with other major economies, according to a German study.”
To solve the jitters, talks are circulating that UK Chancellor Rishi Sunak will step back from a planned tax hike in March. The British Finance Minister recently announced a £4.6 billion support package to help businesses battle the third lockdown.
Elsewhere, the Sino-American tussle escalates on the US crackdown on Chinese companies and firming ties with Taiwan. Furthermore, US President Donald Trump’s impeachment is likely to be put on the Congress table again even as Vice President Mike Pence hasn’t favored anything now.
On the positive side, hopes of the US covid aid package gain momentum as Friday’s downbeat employment data from American push President-elect Joe Biden towards immediate further fiscal support, including increased direct payments of $ 2,000.
Against this backdrop, stock futures in the US and the UK remain sluggish while the US dollar index (DXY) jumps to a more than two week high.
Looking forward, risk headlines remain as the key driver to watch wherein virus updates and US stimulus become the keywords to follow.
Technical analysis
The downside break of 21-day SMA, at 1.3525 now, drags GBP/USD towards the late-December lows near 1.3430 while buyers
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