GBP/USD eyes 1.2600 with focus on Brexit talks, UK Chancellor Sunak’s speech

GBP/USD rises to 1.2560 while heading into the London open on Wednesday. The surged to the highest since mid-June on Tuesday and portrays a fourth day of gains by the press time. The increasing odds of a Brexit deal and hopes for further stimulus from the Tory government keep the Cable buyers hopeful. Even so, broad risk aversion wave, as well as the European Union’s (EU) dislike for the UK policymakers’ push, keeps traders on their toes. That said, today’s key negotiation talks in England and the British Chancellor’s speech will be the key to watch for fresh impulse.

EU Leaders reach London, had dinner with their British counterparts…

The bloc leaders finally reached the British land to restart the Brexit talks after an abrupt end during the last week. The diplomats had their dinner with the UK policymakers but no headlines crossed the wires afterward as they might choose to keep the cards hidden ahead of the informal talks in the Whitehall, up for today. British Prime Minister (PM) Boris Johnson showed readiness to accept the Australia-style trade deal, in a call with the German leader Angela Merkel. However, the bloc remains sturdy on its demands for “level-playing field”, fisheries and jurisdiction boundaries. This adds to the likely noise about to happen today.

Sunak is up for announcing another multi-billion push to the economy…

UK Chancellor Rishi Sunak is all set to speak for the efforts that the Conservatives have put in to combat the coronavirus (COVID-19). In doing so, the diplomat could unveil nearly two billion pounds of employment benefits, tax cuts and unique measures like spending vouchers in a bid to revive the confidence in the government. However, given the leaked assessments of offers, only a disappointment could please the momentum traders.

Other than the Brexit and measures to safeguard the British economy, virus updates also become important as they have recently weighed on the market’s risk-tone sentiment. Elsewhere, global dislike for China also weighs on the traders’ mood. The dragon nation recently criticized the British ban on Huawei but gained no positive response. On the contrary, the US raised bars for Chinese diplomats’ visas while also thinking to undermine the Hong Kong dollar peg in a move to punish Beijing. While portraying the mood, the US 10-year Treasury yields seesaw near a multi-week low of 0.65% whereas stocks in Japan flash mild losses as we write.

Although the economic calendar comprises no major data/events, UK politics and Brexit headlines are ready to offer a volatile session for the pound traders.

Technical analysis

Considering the Cable’s ability to stay beyond the key Fibonacci retracement, buyers are again attacking the 200-day EMA level of 1.2590. Though, the pair’s additional rise needs to gain validation by crossing the 1.2600 threshold.