GBP/USD wavers around mid-1.3500s amid Trump’s covid stimulus, doubts over Brexit

• GBP/USD fades recovery moves from 1.3530 even as DXY drops amid broad risk-on mood.
• Doubts over level playing field, financial services weigh on Brexit optimism.
• Trump signs the much-awaited American stimulus package, UK Scientists warn of a surge in hospitalizations.
• Off in Britain, lack of US data/events keeps risk catalysts on the driver’s seat amid a dull day.

GBP/USD cools down the upside momentum, portrayed early in Asia while easing to 1.3560 ahead of Monday’s European open. The cable initially cheered the US dollar’s broad weakness on the passage of the US coronavirus (COVID-19) stimulus. However, uncertainties over the future of the recently signed Brexit deal weigh the quote even as markets are off in the UK.

Bloomberg raises questions about the so-called Canada-style trade deal while raising doubts over the key issues like the level Playing Field, Finance and Gibraltar. On that front, UK’s Financial Minister Rishi Sunak said, per Reuters, “Prime Minister Boris Johnson has admitted it is an accord which does not have as much as he would have liked about the financial services sector and regulatory equivalence. I think (that) will give people that reassurance that we will remain in close dialogue with our European partners when it comes to things like equivalence decisions.”

On the other hand, UK Foreign Secretary Domini Raab suggests Britain’s readiness to clinch trade deals with Australia, the US and Indo-Pacific region now that they’re done with the Brexit deal.

Elsewhere, doctors in London are worried over the jump in the patients while suggesting further worsening of conditions. “Doctors in London said that their hospitals were beginning to resemble a “war zone” and those in Wales put out an urgent call for anyone with experience working in intensive care to come forward to help,” said The Times. The news also mentions covid data while saying that there were 21,683 patients with Covid-19 in British hospitals on April 12, just before numbers started falling. On December 22, the last date with complete data for the whole country, there were 21,286.

Contrary to the uncertainty in the UK, US President Donald Trump’s signing of the American aid package favors the risk amid a light trading session in Asia. US House Speaker Nancy Pelosi tweeted after the decision that the President must immediately call on Congressional Republicans to end their obstruction and to join him and Democrats in support of our stand-alone legislation to increase direct payment checks to $2,000, which will be brought to the Floor tomorrow.

While headlines concerning the US stimulus and virus woes can offer intermediate moves, global markets are likely to remain sluggish during the final week of 2020.

Technical analysis

Rising wedge on the hourly chart, coupled with the multiple pullbacks from 1.3619/24 area join normal RSI conditions to suggest further weakness in GBP/USD prices. As a result, a clear downside break of 1.3525, also piercing off the 200-HMA level of 1.3460, becomes necessary for the bear’s entry.