GBP/USD eyes biggest weekly loss in two months, US data in focus

GBP/USD seesaws around 1.2210, down 0.14% on a day while heading into the London open on Friday. Though, the pair is up for the biggest weekly losses in eight as Brexit worries, coronavirus (COVID-19) pessimism and broad US dollar strength weigh over the Cable. Hence, pair traders will pay close attention to today’s US consumer-centric data for fresh direction.

Brexit talks remain as challenging…

While the European Union (EU) and the UK negotiators are still calling off their video conferencing Brexit talks, the European Commission’s (EC) legal action against the UK made the talks tough. As per the Politico, “the European Commission launched infringement proceedings against the UK on Thursday, accusing it of failing to comply with EU law on free movement.”

On the other hand, the UK PM maintains its preference for border checks at the Northern Ireland (NI) whereas the NI Secretary Brandon Lewis has said again there will not be a border down the Irish Sea.

Further, comments from the UK’s top negotiator, David Frost suggest that the EU has asked for more from the UK than they have from other sovereign countries with whom they have reached free trade agreements.

Coronavirus keeps looming over Britain…

As per the latest research by the Public Health England (PHE) and Cambridge University, around 6.5 million overall in England, including 1.8 million in London, are infected with the virus, per the UK Telegraph.

To prove its workings, the UK government is in talks with Swiss drugmaker Roche Holding AG, as per the Reuters, to buy an accurate COVID-19 antibody test, following the lead of the European Union and the United States which have already given preliminary approval to the tests.

Amid all these BOE Governor Andrew Bailey stays ready to take further action but rules out rate cuts. Further, the British central bank’s citizen panel expects COVID-19 to have a large and lasting impact on the economy and society more broadly.

On the other hand, the US dollar benefits from the receding hopes of negative Fed rate as well as increased odds of further stimulus from the government. That said, the Dollar Index (DXY), a gauge of the greenback versus major currencies, remains mildly bid around 100.30 by the press time.

Looking forward, investors will keep eyes on the US April month Retail Sales and May month Michigan Consumer Sentiment Index, expected to drop to -12% and 68 from respective priors of -8.7% and 71.8. “the April data for retail sales are likely to show even more weakness than the March data, as the collapse in activity stemming from shutdowns and social distancing did not start until around the middle of March. On the plus side, online consumer spending was probably boosted somewhat in late April by "recovery rebates," and food and beverage store sales probably remained fairly strong,” said analysts at TD Securities.

Technical analysis

A short-term falling wedge resistance, near 1.2330, guards the pair’s immediate upside, break of which could trigger fresh run-up towards 1.2465 and 1.2500 numbers to the north. On the downside, April month low near 1.2165 and the formation support around 1.2150 can keep the sellers away from 50% and 61.8% Fibonacci retracement levels of the pair’s March-April run-up, respectively near 1.2045 and 1.1900.