GBP/USD marks four-day winning streak ahead of UK PM Johnson’s return to office

• GBP/USD remains mildly bid amid a broad US dollar weakness.
• UK PM “raring to go” back to No10, might take steps to shrug off allegations of non-performance.
• UN poverty expert said UK coronavirus response utterly hypocritical, the target of 100,000 tests a day fear to be missed.
• Virus/Brexit updates could compensate for a light economic calendar.

GBP/USD remains on the bid for the fourth day in a row, currently up 0.20% on a day to 1.2400, while heading into the London open on Monday. Although the UK’s handling of the coronavirus (COVID-19) crisis and the Tory government’s stand on Brexit receive broad criticism, the return of the UK PM Boris Johnson from the pandemic infection seems to please the buyers off-late.

After getting a go from doctors at the Chequers, UK PM Johnson will take the driving seat back from the acting chief Dominic Raab. As per the Telegraph, “Boris Johnson has told aides that he is "raring to go" ahead of his return to Downing Street on Monday, as he cited Cicero to insist that the health of the nation should be "supreme" when considering any changes to the lockdown.”

While he was away since early April, due to the virus infection, the nation’s response to the pandemic has been heavily criticized despite the hard efforts from the Chancellor Rishi Sunak and Health Secretary Matt Hancock, not to forget the Deputy PM Dominic Raab.

A lack of medical supplies and the surge in the fatalities have recently pushed the United Nations (UN) poverty expert Philip Alston to attack the UK’s coronavirus response as “utterly hypocritical” after successive administrations implemented policies of austerity and public-sector cuts, per The Guardian.

Additionally, the Health Secretary’s optimistic target of 100,000 tests a day got a blow on Saturday after the government needed to avail military helps to overcome 29,000 mark.

On the Brexit front, the European Union’s (EU) EU’s Chief Negotiator Michel Barnier was cited, by BBC as saying that the negotiations have been disappointing. The reason could be cited from the Tory government’s refrain from extending the Brexit deadline from December 31, 2020, despite the epidemic.

That said, the market’s risk-tone sentiment remains mildly positive with the US 10-year Treasury yields gaining more than three basis points (bps) to 0.632% whereas Asian stocks also flashing gains by the press time.

The UK PM is expected to announce some key decisions on whether and when the lockdowns will be eased while also likely to provide signals for the Brexit proceedings. It should also be noted that the Chancellor Sunak’s loans to the small business seem to have a little impact, which in turn might push the diplomat towards other measures as he is considered to prepare for another package to combat the virus.

Technical analysis

A sustained break above 10/21-day SMA confluence, near 1.2400, becomes necessary for the Cable to aim for 61.8% Fibonacci retracement of March month downside around 1.2515. In the absence of which, 50% Fibonacci retracement level, near 1.2300, followed by an upward sloping trend line since April 07, close to 1.2285, will be on sellers’ radar.