GBP/USD: Mildly offered below 1.2050 as Brexit optimism fades, UK/US data, Fed Chair Powell eyed

GBP/USD prints mild losses around 1.2030-35 during early Monday, consolidating the first weekly gains in three amid the market’s cautious mood ahead of the key catalysts, as well as fading Brexit optimism. Adding filters to the latest market moves could be the downbeat US Treasury yields, extending the previous week’s pullback from a multi-month high, as well as the minor losses of the US stock futures.

That said, the Democratic Unionist Party (DUP) has urged the Government to stop “overselling” its new post-Brexit deal on Northern Ireland and focus on providing clarity on its detail. The same shows the DUP’s dislike for the initial details of the EU-UK deal on the Northern Ireland Protocol (NIP) and raises challenges for the smooth passage of the key Brexit developments in the UK Parliament. To avoid any hardships, the British government is bracing to provide more details on how Northern Irish lawmakers can potentially veto new European Union laws.

"Just to make sure that we get this exactly right, in the next few days, we're going to codify this," UK’s EU Minister Chris Heaton-Harris told BBC Radio Ulster, referring to the Stormont brake, per Reuters.

Elsewhere, mixed headlines from China and a cautious mood ahead of this week’s Federal Reserve (Fed) Chairman Jerome Powell’s half-yearly Testimony, as well as the US employment report for February, seem to weigh on the GBP/USD price amid a sluggish start. Furthermore, the mixed performance of the US Treasury bond yield and the US stock futures also challenge the momentum traders even as the prices print mild losses.

While portraying the mood, the US 10-year Treasury bond yields rose to the highest levels since November 2022 before easing to 3.95% at the latest. That said, Wall Street closed with gains but S&P 500 Futures remain indecisive, reversing the early-day losses, by the press time.

Moving on, headlines surrounding Brexit and the second-tier UK data may entertain GBP/USD traders but major attention will be given to how Fed’s Powell could push back the policy pivot concerns. Also important will be to watch Friday’s monthly UK data dump for January and the US Nonfarm Payrolls for February. Given the recently downbeat US statistics, any more weakness in the headline figures could put a floor under the Cable price.

Technical analysis

A clear downside break of the one-month-old previous resistance line, now support around 1.2020, becomes necessary for the intraday sellers. Even so, the 1.2000 psychological magnet and the 200-DMA support of around 1.1900 could challenge the GBP/USD pair’s further downside.

Alternatively, a daily closing beyond the 50-DMA hurdle surrounding 1.2140 could propel the Cable pair toward the mid-February swing high surrounding 1.2270.