GBP/USD extends losses below 1.2400 ahead of UK GDP

• GBP/USD remains on the back foot.
• EU-UK tussle over Brexit deadline renewed amid coronavirus.
• Numbers of cases drop in the UK but experts doubt the conclusion.
• UK GDP, US data can offer intermediate direction, COVID-19/Brexit will be the key.

Fresh concerns over the Brexit deadline join hands with doubts over the UK’s receding coronavirus (COVID-19) cases and downbeat business sentiment to exert downside pressure on the GBP/USD pair. That said, the Cable pair currently trades 0.60% down to 1.2344 while heading into the London open on Tuesday.

Reuters recently came out with the news, based on surveys conducted by the market research firm GfK and Lloyds Bank, suggesting a drop in the UK’s consumer and business confidence.

Not only sentiment indices but the pandemic has also renewed the EU-UK tussle over the December 31, 2020 deadline after the EU’s political group urged Britain to do the “responsible thing” and extend the Brexit transition period, per The Guardian. However, the UK PM Boris Johnson’s spokesperson turned down any such scope while stating that the transition period ends on December 31, 2020. This is enshrined in UK law. The UK diplomat also turned down the hopes of any further lockdown measures while signaling a sustained fight against the epidemic during the 12 weeks.

The British Pound earlier gained on Monday as the latest numbers suggested a drop from March 27 figures of 2,900 to 2,400 new cases on 29 March. Though, The Guardian raises doubts on whether to term it as a trend while relying on expert comments.

On the positive side, the UK is extending efforts and is close to open the world’s largest hospital built in 10-days while also ordering more ventilators, nearly 15,000, than the total number it says it needs to cope with the coronavirus pandemic.

Elsewhere, US President Donald Trump suggested no to nationwide stay-at-home order while helping to extend the previous day’s risk reset. As a result, the US 10-year treasury yields and most Asian stocks mark mild gains by the press time.

The final reading of the UK’s fourth quarter (Q4) GDP, expected to march 0.0% initial forecast, could offer immediate direction ahead of the US data. However, news concerning the Brexit and the virus updates will not lose their importance in the meantime.

Technical analysis

Failure to cross 61.8% Fibonacci retracement of March 09-20 downside increases the odds of the pair’s further declines towards March 18 high near 1.2130. Alternatively, a 200-day SMA level near 1.2670 adds to the pair’s upside barriers beyond the said Fibonacci retracement levels surrounding 1.2520.