- GBP/USD bounces back ahead of the key catalysts from the UK.
- Chancellor Rishi Sunak is expected to try various means to please Brexiteers amid coronavirus fears.
- The EU-UK jitters continue with the bloc’s policymakers lagging in the preparations.
With the US dollar paring back its previous gains amid fresh risk-off, GBP/USD recovers 0.10% of Tuesday’s losses to 1.2925 while heading into the London open on Wednesday. While the US dollar index is marking losses after the stellar performance of the previous day, the British Pound buyers await key UK data and first budget after Brexit for fresh impulse.
An increase in the numbers of the coronavirus (COVID-19) cases in the US follows the fears that the labs working under the Trump administration lack resources for testing. Also weighing on the greenback could be an absence of details concerning President Donald Trump’s earlier promise of ‘major’ economic response to the pandemic.
In the case of Britain, Health Minister Nadine Dorries grabbed the headlines after being infected with the deadly virus. The UK authorities are now on the run to test nearly 10,000 people daily, as per the Financial Times.
Elsewhere, the UK PM Boris Johnson was recently criticized by the former Supreme Court judge to hostility to institutions such as the judiciary, the civil service and the BBC. Furthermore, the European Union’s (EU) Brexit negotiator Michel Barnier cites policymakers lagging behind their British counterparts as far as the post-Brexit trade talks are concerned.
While portraying the risk-tone, the US 10-year treasury yields fail to carry the previous day’s run-up, current down eight basis points (bps) to 0.67%.
Looking forward, the monthly data relating to manufacturing and industrial production from the UK as well as trade and GDP numbers can offer intermediate clues ahead of the all-important UK budget. Chancellor Rishi Sunak is expected to announce a major relief to the UK business houses and will try his hands to keep entrepreneurs tied to Britain after the actual Brexit (which may lose the London’s powerhouse status). The budget will also provide ample room for the business as well as locals to confront the negative implications of the COVID-19. Financial Times cite anticipate the Finance Minister to unleash the largest rise in public borrowing in 30 years.
Also Read: UK Budget Preview: Showing the way with fiscal stimulus? GBP/USD has room to rally
On the other hand, the US Consumer Price Index (CPI) as well as details of US President Trump’s coronavirus stimulus, if any, could make traders busy.
Technical Analysis
100-day SMA around 1.2990, followed by a 50-day SMA level of 1.3000, can question the pair’s bounce while sellers will look for entry below 50% Fibonacci retracement of its October-December 2019 upside, around 1.2855, to target the confluence of 200-day SMA and 61.8% Fibonacci retracement near 1.2710/2700.
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