GBP/USD: Fizzles BOE’s Bailey-led gains below 1.3700 amid UK’s covid fears


  • GBP/USD eases from eight-day top after posting the heaviest gains in 10 weeks the previous day.
  • BOE’s Bailey ruled out negative rates, UK government forced to set up temporary morgues amid virus-led challenges to healthcare system.
  • Brexit costs more to UK fisheries, Brussels-London will talk finance cooperation soon.
  • US policymaker push for Trump impeachment, President-elect Biden’s stimulus and virus woes eyed.

GBP/USD steps back from the weekly top of 1.3693 to 1.3680, up 0.15% intraday, while heading into London open on Wednesday. The sterling jumped the most since early November the previous day as Bank of England (BOE) Governor Andrew Bailey dropped calls of negative rates. While the initial US dollar weakness helped cable to extend those gains early in Asia, renewed coronavirus (COVID-19) fears and Brexit pessimism weigh on the quote off-late.

In his latest comments, BOE’s Bailey not only muted negative rate chatters but also said he does not, “think covid will cause a structural shift in the UK economy.” Following the news, GBP/USD managed to post the biggest since in more than two months while broad market optimism over US President-elect Joe Biden’s fiscal stimulus dragged the US dollar down and helped extend the upside early on Wednesday.

However, a jump in the covid cases and death tolls in the UK poses a serious challenge to the British health care system. The same could be gauged from the New York Post article saying, “British authorities have had to set up temporary morgues in some areas after local hospital mortuaries ran out of space due to a surge in deaths caused by the COVID-19 pandemic. Britain has reported record levels of deaths and new infections in the last few weeks, fuelled by a new variant of the coronavirus which has caused a surge in cases, especially in London and southeast England.”

Additionally testing the British currency are Brexit worries as Reuters mention British fishermen’s problems with French fishmongers and seafood factories.

It should be noted that the virus woes are also escalating in the US, Germany, Japan and China, which in turn probes the previous risk-on mood and stops the US 10-year Treasury yields around March 2020 top, flashed the previous day.

Looking forward, Brexit talks over UK-EU services, as suggested to take place this week by Bloomberg, will be the key while the US political turmoil and aid package signs can entertain GBP/USD traders as well. It should be noted that the comments from the ECB President Christine Lagarde and the US Consumer Price Index (CPI) for December, expected 1.3% YoY versus 1.2% prior, will also offer extra catalysts to watch.

Technical analysis

Having breached the one-week-old falling trend line, GBP/USD is up for challenging the multi-month high flashed last week around 1.3705. Meanwhile, daily closing below the 21-day SMA level of 1.3555 becomes necessary to recall sellers.

Additional important levels

Overview
Today last price 1.3686
Today Daily Change 20 pips
Today Daily Change % 0.15%
Today daily open 1.3666
 
Trends
Daily SMA20 1.3549
Daily SMA50 1.3393
Daily SMA100 1.3193
Daily SMA200 1.2896
 
Levels
Previous Daily High 1.3669
Previous Daily Low 1.3502
Previous Weekly High 1.3704
Previous Weekly Low 1.3532
Previous Monthly High 1.3686
Previous Monthly Low 1.3134
Daily Fibonacci 38.2% 1.3605
Daily Fibonacci 61.8% 1.3565
Daily Pivot Point S1 1.3555
Daily Pivot Point S2 1.3445
Daily Pivot Point S3 1.3388
Daily Pivot Point R1 1.3722
Daily Pivot Point R2 1.3779
Daily Pivot Point R3 1.3889

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 

EUR/USD News

GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 

GBP/USD News

Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures