GBP/USD: Modestly flat above 1.3000, Huawei talks in the spotlight

GBP/USD trades near 1.3020 ahead of the London open on Wednesday. The cable recently weighed down by concerns of the US-UK tussle over the British allowance to the Chinese tech giant for 5G development. However, the moves are less strong ahead of the key BOE meeting on Thursday, followed by Friday’s Brexit day.

Republicans in the US have started criticizing the Tory government’s plan to allow China’s Huawei to build non-core elements of the UK’s 5G network. This is likely to weigh on the US-UK deals and could well be discussed by the US Secretary of State Mike Pompeo when he visits Britain on Wednesday.

On the Brexit side, the UK PM Johnson’s immigration efforts are gaining mixed responses with the ‘Australian-style’ immigration vision getting slapped by the independent Migration Advisory Committee (MAC).

The latest pause could also be attributed to the risk reset based on the receding pessimism concerning China’s coronavirus. The same could be witnessed in the recovery of the US 10-year treasury yields and Asian stocks.

Moving on, odds of the Bank of England’s (BOE) next move are standing on thin ice amid recently mixed data and Brexit concerns, not to forget Governor Carney’s dovish tone. Furthermore, Friday’s Brexit alarm won’t be too good to hear as the European Union and the UK will jostle over trade deals afterward and the early indicators are favoring a negative start.

Technical Analysis

A daily closing below a month-long rising support line, currently at 1.2980, can drag the quote towards a 100-day SMA level of 1.2862, until then, odds of the pair’s pullback to 1.3155/60 can’t be ruled out.