GBP/USD awaits Brexit clues to stay above 1.3000 after Friday’s Dragonfly Doji

GBP/USD stays modestly weak around 1.3045/50 while heading into the London open on Monday. While pessimism surrounding the upcoming Brexit talks has been weighing over the pair, US dollar pullback and an absence of major catalysts keep the traders' calm off-late.

The UK diplomats continue to ignore the global events and raise speculations of being introvert after Brexit. “Britain is usually a prominent presence at the annual conference in Bavaria, where this year France’s President Emmanuel Macron, US secretary of state Mike Pompeo and Chinese foreign minister Wang Yi gathered to discuss issues from transatlantic defense co-operation to the security challenges posed by China and the impact of big tech on elections,” FT said recently.

The Guardian also pointed out the Munich security summit to convey French Finance Ministers’ fears of tough Brexit talks between the EU and the UK when starting negotiations during the next month.

On the other hand, fears of coronavirus have been conveyed by Moody’s and the IMF whereas policymakers from Japan and China stay ready to take possible measures.

That said, the risk-tone stays sluggish with stocks in China contradicting those of India and Japan amid hopes of further monetary/fiscal measures to counter coronavirus risk.

Given the absence of the US traders, due to the President’s Day holiday, coronavirus and Brexit are likely the key catalysts that market players will follow for short-term direction.

Technical Analysis

The bearish candlestick formation near the eight-day top, coupled with the repeated failures to cross 50-day SMA level of 1.3075, increase the odds of the pair’s declines to 100-day SMA around 1.2930. Alternatively, a downward sloping trend line from December, at 1.3130, adds to the resistance beyond 50-day SMA.