GBP/USD justifies Monday’s bearish Doji to drop towards 1.2000 ahead of UK/US PMI
- GBP/USD takes offers to refresh intraday low after a sluggish start to the week.
- Return of full markets propels yields, renews US Dollar run-up.
- Looming fears over NI Brexit deal and the UK recession weigh on Cable.
- UK/US PMIs eyed for fresh impulse; risk catalysts are important too.
GBP/USD renewed its intraday low near 1.2020 early Tuesday morning as traders cheered the return of the Western traders following an extended weekend due to the US holidays. In addition to the full market’s return, the Cable pair traders also portray fears emanating from the Brexit deal negotiations and doubts over the small industries’ optimism.
Late on Monday, the UK Times came out with the news suggesting British Ministers are prepared to resign over (Prime Minister) Rishi Sunak’s Brexit deal if it risks Northern Ireland’s place within the UK. “There is a mounting backlash among Eurosceptic Conservative MPs to the deal,” mentioned The Times.
Elsewhere, The Times quotes Barclay’s industrial survey to state that bosses of small companies are increasingly upbeat about their prospects. The same adds to evidence that the outlook for the British economy may not be as bad as has been feared, mentioned in the news.
Above all, fears of a monetary policy divergence between the Fed and the Bank of England (BoE), backed by the week’s British mixed statistics and the strong US data, seem to weigh on the GBP/USD price.
That said, the US 10-year Treasury bond yields picked up bids to near the highest levels marked since early November 2022, mildly bid around 3.86% at the latest.
It should be noted that the geopolitical fears emanating from China and Russia also seem to underpin the US Dollar’s safe-haven demand and weigh on the GBP/USD price.
Preliminary readings of the S&P Global PMIs for February will be crucial for the GBP/USD pair traders. That said, upbeat data from the UK becomes necessary to put a floor under the prices as the latest US Treasury bond yields’ moves favored the US Dollar ahead of the key US PMIs.
Technical analysis
Although Monday’s Doji candlestick keeps GBP/USD bears hopeful, an upward-sloping support line from late November 2022, close to 1.1920 by the press time, puts a floor under the Cable pair.
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.
