GBP/USD: Bulls step back from one-month top with eyes on Brexit negotiations

GBP/USD recedes to 1.2485, down 0.07%, while heading into the London open on Tuesday. The pair’s recent pullback could be traced from the US dollar’s bounce off multi-day low. Even so, the last full round of Brexit talks, starting today, will be the key to determine near-term Cable moves.

Protests against the alleged killing of Minnesota’s George Floyd recently led to the curfew in New York while also calling militaries on the streets of Washington. US President Donald Trump harshly criticized such a move during the early-day speech from Rose Garden. Further, the Republican leader also showed readiness to use all possible social and/or military measures to tame the riots.

Against this backdrop, the US dollar index (DXY), the greenback gauge versus major currencies, recovers 0.07% from March 16 low to 97.89 by the press time.

Before taking a U-turn from the highest since May 01, GBP/USD cheered news from The Times that increased the odds of no more Brexit deadlock. The news suggested that the UK policymakers might compromise on fisheries and ‘level playing field’ trade rules if the EU backs off from its ‘maximalist’ demands. The speculations also gained momentum from the UK express report citing the European Union’s chief negotiator Michel Barnier expecting Britain will budge first to break the bitter impasse in the Brexit trade talks when they resume tomorrow. Even so, the two sides have historically shown no interest to agree on the Brexit terms and the tension remains high ahead of the final round of detailed talks.

Elsewhere, The Guardian quoted the YouGov survey to say that the Public trust in the UK government as a source of accurate information about the coronavirus has collapsed in recent weeks. Furthermore, Sky News came out with the news, relying on the comments from Beijing's ambassador to the UK Liu Xiaoming, saying “China would welcome an ‘international review’ into the origins of the coronavirus pandemic.

While the week-long Brexit negotiations will keep the GBP/USD traders busy looking for fresh details, updates concerning the protests in the US as well as the US-China tussle might also offer additional clues to the pair.

Technical analysis

The pair’s ability to break 100-day EMA keeps the buyers hopeful but further upside becomes less likely unless the quote crosses 61.8% Fibonacci retracement level of March month fall. Should there be a daily closing beyond 1.2520, a 200-day EMA level around 1.2615, followed by April month top near 1.2645, could lure the bulls. Meanwhile, a downside break below 100-day EMA level of 1.2500 could fetch the quote to Friday’s top near 1.2395.