GBP/USD fades recovery moves below 1.3600 as risks dwindle
- GBP/USD fizzles the corrective pullback from 1.3532, eyes extending two-day losing streak.
- Covid woes remain dominant in the UK and the US, policymakers from America eye pushing Trump out of the White House.
- Global ire towards China continue despite Beijing's efforts to highlight the Capitol Hill issue.
- Vaccinations keep traders hopeful, US stimulus eyed, NFP to decorate the calendar.
GBP/USD stays depressed while easing to 1.3563 during the initial Asian session on Friday. The cable dropped for the second consecutive day before bouncing off 1.3532. However, the recovery cools down from 1.3577 off-late. Fundamentals suggest the coronavirus (COVID-19) outbreak keeps weighing on the Cable even as the US dollar trims the latest gains. Updates from the White House and the US Nonfarm Payrolls (NFP) are the key, not to forget the virus news.
Although UK PM Boris Johnson assures British citizens over getting the covid vaccine within 10 miles of home, a jump in the virus-led death toll and surging hospitalization favor the Sterling sellers. Not only the sustained run-up in the virus-led death toll, recently by 1,162 fatalities, but the jump in hospitalizations to April 2020 levels also become the cause of concern even as 1,296,432 British people have received the first dose of a COVID-19 vaccine.
While providing the details, The Guardian said, as of 8 am yesterday (6 January), 27,727 patients were being treated in National Health Services (NHS) England hospitals. That is 46% more patients than at April peak (18,974 Covid patients on 12 April). It was further mentioned that the regions with the worst comparative first-wave to second-wave are the East of England (126% higher) and the south-east (109%).
On the other hand, US House Speaker Nancy Pelosi and Democratic Leader Chuck Schumer demands immediate impeachment of US President Donald Trump for inciting supporters to rock Capitol Hill. However, the Business Insider recently came out with the news suggesting Vice President Mike Pence defending Trump.
Elsewhere, China is trying hard to highlight the incident that stormed the US Congress but American policymakers are believed to be silently preparing a few more sanctions and further hardships for Beijing companies.
It should be noted that the risks dwindle for strong clues after Wall Street benchmarks portrayed another upbeat performance on Thursday.
Against this backdrop, global markets keep eyes on the US COVID-19 paychecks of $2,000 as Democratic Party is finally in. However, the monthly reading of the US NFP for December, expected 71K versus 245K prior will also be the key to watch.
Read: Nonfarm Payrolls Preview: Long path to recover to be even longer
Technical analysis
The weekly falling trend line, at 1.3645 now, directs GBP/USD towards 21-day SMA support of 1.3513.
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.
