GBP/USD defends 1.2800 ahead of UK Services PMI

• GBP/USD fails to hold onto recovery gains as the US dollar pulls back from yearly lows.
• The Fed-led losses retraced after Charles Evan tried to placate traders, risk recovery in Asia also played its part.
• Brexit negotiations are on with Irish PM raising doubts on any positive end, BOE’s Carney termed coronavirus as disruption.
• UK Services PMI, US ISM Non-Manufacturing PMI and risk catalysts like Brexit, coronavirus will be important to follow.

GBP/USD seesaws around 1.2812, up 0.03%, while heading into the London open on Wednesday. The Cable recently benefited from the broad US dollar weakness after the Fed’s shock 0.50% rate cut whereas upbeat comments from the BOE policymakers also played their part. Though, traders seek more clues from the economic calendar, coronavirus (COVID-19) headlines for fresh impulse.

While the EU-UK Brexit talks are on, iNews came out with the news, quoting the Irish PM, which suggests is a “growing possibility” of a no-deal Brexit at the end of the year. However, in his latest comments, the European Union’s (EU) chief Brexit negotiator Michel Barnier marked a U-turn from his generally observed UK-critic tone while saying that the talks are going positive.

Further, UK Express came out with the news that Spain is secretly exploiting ways to have a larger influence in Gibraltar after the Brexit. It should also be noted that the BOE policymakers, including Governor Carney, appreciated the use of fiscal means to counter COVID-19 while also terming it as disruption and not the destruction.

Elsewhere, the Asian markets benefited from the nation’s preference of fiscal measures than their Western counterparts, like the Fed, which recently rang alarms with surprise rate cuts. While portraying the risk-recovery, the MSCI’s gauge of Asia-Pacific shares outside Japan registers 0.80% gains with Japan’s NIKKEI marking 0.40% profits by the time of writing.

Investors will now keep eyes on the coronavirus as well as the related actions from the global policymakers for fresh impulse. On the economic front, final readings of the UK Services PMI for February, expected 53.3, followed by the US ISM Non-Manufacturing PMI, forecast 54.9 versus 55.5 prior, will be important to watch.

Technical Analysis

A daily closing beyond February 10, 2020 low near 1.2870 will be important for buyers to watch whereas sellers can target sub-1.2600 area during the further declines.