GBP/USD: Mildly bid towards 1.2800 on Brexit optimism

GBP/USD keeps the early-Asian recovery, up 0.18% intraday near 1.2770, while heading into Monday’s London open. The Cable benefits from the weekend headlines suggesting brighter odds of success for the key Brexit talks. Though, the coronavirus (COVID-19) and mixed political clues keep the bulls chained ahead of the crucial week comprising trade negotiations and UK GDP. While the divorce talks will start from Tuesday, British Cabinet Office minister Michael Gove’s visit to Brussels makes the day important amid a light calendar.

Optimism surrounding Frost and Company…

Although the Internal Market Bill (IMB) has ripped off the latest round of Brexit talks, The Daily Mail said UK’s Negotiator Lord Frost’s team is reported to have privately said: “There will be a deal.” Also on the positive side is head of the Confederation of British Industries (CBI) head, Carolyn Fairbairn who said that a trade deal "can and must be made."

On the other hand, European Union’s (EU) Brexit diplomat Michel Barnier is reported to be the neutral head of the talks but leaders from France and Ireland are flashing red signals over the success of this week’s discussion in Brussels.

The cost of losing a trade deal is estimated, by the Financial Times, as near 1.0 million British jobs whereas a further burden on the economy that is yet to overcome the COVID-19 woes seems to push the BOE policymakers to defend the negative rate policies. Even so, the Centre for Brexit Policy urged Prime Minister Boris Johnson to tear up his divorce deal with the EU, per Reuters.

Elsewhere, the Tory diplomats are working hard to avoid isolation cheats and stave off the lines near pubs, restaurants around 10:00 PM curfew. As a result, The Times conveyed the odds of the total social lockdown.

It’s worth mentioning that the US District Court of Columbia’s halt to the Trump administration’s ban on TikTok download joined vaccine hopes to keep the risk-tone sentiment positive at the week’s start. Though, a lack of major data/events lets the traders guessing.

Against this backdrop, Futures in the UK and the US are mildly positive while the Asia-Pacific shares print gains.

Looking forward, updates from Gove’s visit to the European Commission Vice President Maros Sefcovic will be critical amid an absence of any major catalysts scheduled for publishing.

Technical analysis

A falling trend line from September 01, at 1.2785 now, restricts the pair’s immediate upside ahead of 1.2870/75 resistance. Meanwhile, the monthly low around 1.2675 can question GBP/USD bears.