GBP/USD under pressure below 1.3050 ahead of UK data dump

GBP/USD trades weaker around 1.3040 while heading into the London open on Monday. The pair highlights the dovish tone from the BOE and the EU-Irish pessimism surrounding the Brexit while ignoring British forms’ positive outlook and USD weakness. Investors will have a slew of monthly activity and output data to gain fresh impulse.

Doves at the BOE seem too weak to defy the US dollar declines. The BOE’s member Gertjan Vlieghe was the second, after Governor Mark Carney’s dovish messages last-week, who sees easy money policy going forward. During the weekend, the central bank policymaker said, “would vote in favor of a looser monetary policy during the late-January meeting.”

On the Brexit front, Irish Deputy Prime Minister Simon Coveney followed the footsteps of EU’s chief Brexit negotiator and European Council President while citing doubts on the UK PM Boris Johnson’s December 31, 2020, Brexit deadline.

Alternatively, a survey conducted by the Confederation of British Industries (CBI) and the Price Water Cooper (PwC) showed that the business moral amongst the UK’s financial firms jumped for the first time in four years.

The USD declines could be attributed to Friday downbeat employment numbers as well as the recent reduction in the greenback’s safe-haven demand. The progress at the US-China trade front and receding odds of the US-Iran war could be cited as reasons contributing to the lack of risk-safety. With this, the stocks in Asia and the S&P 500 Futures stay mostly positive while the US 10-year treasury yields show no signs of movement amid the Japanese holiday. It's worth mentioning that Iran recently arrested the UK's ambassador to Tehran and the global leaders dislike it.

Looking forward, UK’s November month Industrial Production, Manufacturing Production, monthly GDP and trade numbers will be the key to watch. While a likely contraction in the production numbers to -0.2% MoM could join a fall in trade numbers, expected no change in the GDP figure of 0.0% can keep the pair’s moves under check. However, any moves will be weighed against the BOE Governor’s downbeat statement that doubted economic strength.

Elsewhere, the US-China trade story, the UK-Iran tension and the US-Iran headlines will keep traders entertained amid no major data/event from the US.

Technical Analysis

GBP/USD prices are likely to find challenges in extending the recent recovery unless breaking a descending trend line since December 13, at 1.3125 now. Alternatively, pair’s declines below 50-day SMA level of 1.3023 will be capped by a two-month-old rising trend line, near 1.2970.