GBP/USD: Brexit woes, new covid strain hint bear’s return near 31-month high
- GBP/USD eyes further losses after stepping back from May 2018 top on Friday.
- Brexit talks remain difficult with significant differences suggesting no deal in 2020.
- London, Southeast England enters Tier 4 lockdown, Europe, Turkey suspend UK travels.
- US policymakers are near to the stimulus deal after a compromise on the Fed-limiting GOP proposal.
Be it Brexit or a new strain of the coronavirus (COVID-19), early indicators suggest GBP/USD extend Friday’s pullback from the multi-month top while nearing 1.3400 during the early Monday’s Asian trading.
Having earlier heard that the Brexit talks between the European Union (EU) and the UK are going tough, the EU Chairman of the Foreign Affairs Committee David Callister tweeted that the European Parliament will not be in a position to grant consent to an agreement this year. While fisheries continue to be a tough nut to crack, the latest updates indicate additional differences over the level playing field.
Read: Brexit update: EP will not now ratify a trade deal in 2020
On the other hand, the new strain of COVID-19 led to the tier-4 activity restrictions in London and Southeast England. After announcing the lockdown, UK PM Boris Johnson called for an emergency Cabinet Office Briefing Rooms (COBRA) meeting to discuss the international travel bans and the freight flow impediments. During the weekend, Turkey and European countries including France and Italy have suspended travels with the UK.
Read: New Covid Strain: Several European countries cancel flights to the UK amid fast-spreading variant
Not only worries for Britain but the likely agreement over the US COVID-19 aid package may also lure the GBP/USD bears. Having recently reached a common field over the Fed’s role in the stimulus, the US Congress is up for voting on the much-awaited government help for Americans.
Looking forward, a light calendar and the year-end celebration mood is less likely to defy GBP/USD moves amid Brexit, virus and US stimulus headlines.
Technical analysis
FXStreet’s Ross J Burland indicates further downside by the GBP/USD prices while saying,
GBP/USD's heavy technical outlook from a near term perspective dominates for the last week before Xmas. A top-down analysis offers a comprehensive insight into both the near-term and medium-term trajectory for the pair.
Read: The Chart of the Week: No gift from Santa this year for GBP/USD bulls
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
