- GBP/USD benefits from the broad US dollar weakness.
- The UK PM announces the most stringent rules post World War II to tame the coronavirus after the death toll reached 335.
- US Senate nears the COVID-19 Bill while the Fed announced unlimited QE the previous day.
- The preliminary PMI data is likely to portray the first impressions of the deadly virus on the key activities.
While benefiting from the broad US dollar weakness, GBP/USD registers 0.75% gains to 1.1635 while heading into the London open on Tuesday. The Cable seems to pay a little heed to domestic coronavirus (COVID-19) concerns amid the broad pullback in the greenback. However, traders are still cautious ahead of the first impressions of the deadly virus on the key activity numbers from the UK and the US.
The US Senate failed to pass the much-awaited $2 trillion COVID-19 Bill but the Republicans are hopeful for the deal to be rolled out soon. Late on Monday, the US Federal Reserve (Fed) announced unlimited Quantitative Easing (QE) to combat the disease.
It’s worth mentioning that the global death toll surges past-16,380 with more than 335 in the UK. While identifying the threat of the outbreak, the British PM Boris Johnson announced the strictest measures, including fines on the public and shops during the lockdown, to push the people to stay at home.
Additionally, the UK’s emergency coronavirus legislation will also reach the House of Lords for further debate before turning into the law some time by the end of the week.
Risk-tone remains positive with the US 10-year treasury yields, S&P 500 Futures and Asian stocks are all on their ways to recover the latest losses.
While the headline Manufacturing and Services PMIs from the UK and the US are likely to slip into the contraction phase, with readings below 50.00. However, TD Securities cite the lag in the closure of the British firms to help the Cable while going forward.
Also Read: UK PMIs Quick Preview: First coronavirus-linked read is a lose-lose situation for GBP/USD
Other than the activity numbers, coronavirus headlines and updates concerning the US package will also be important to watch.
Technical Analysis
A lower high formation on the daily chart, coupled with oversold RSI, suggests gradual recoveries towards Friday’s top near 1.1935.
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