|

GBP/USD nears five-month low amid global rout, BOE minutes in focus

  • GBP/USD remains on the back foot for the fourth day in a row.
  • Coronavirus carnage continues, leads to cancellation of the next week’s EU-UK talks.
  • UK PM Johnson mark the pandemic as the “worst for a generation.”
  • BOE minutes might offer intermediate clues, virus headlines can dominate.

Amid the broad risk aversion, due to the coronavirus (COVID-19) woes, GBP/USD marks mild losses of 0.7% to 1.2560 while heading into the London open on Friday. In doing so, the Cable nears the lowest level in five months as Brexit pessimism adds to the UK’s worries.

With the widespread outbreak of the deadly virus, the UK PM Johnson considered it the worst for a generation while citing fears of the actual numbers being higher than that. The pandemic led to the cancellation of the EU-UK Brexit trade deal talks that were to begin in London from the next week. However, both sides showed readiness to produce legal reports in the meantime.

Even so, the EU Chief Brexit negotiator Michel Barnier doesn’t forget to criticize the UK while saying “very serious divergences” had emerged in this week’s talks, as per the UK Express.

Chancellor Rishi Sunak is expected to step back from the previously announced tax hike as the UK Telegraph said, “the previous tax-raising plans were shelved in light of the coronavirus crisis, a source familiar with Treasury discussions told The Telegraph.”

Across the board, the coronavirus-led risk aversion continues with intermediate pullbacks. The latest one came after the BOJ infused 700 billion Japanese yen. While portraying the same, the US 10-year treasury yields bounce back to 0.82% with S&P 500 Future rising 1.0%. However, stocks in Asia remain under pressure.

Given the present momentum largely directed by the virus updates, traders might pay a little heed to the US data. However, BOE minutes could offer a strong near-term direction after the central bank marked a surprise cut during the week. “Minutes are released at noon GMT from MPC's "special" 10 March meeting where they decided to coordinate the inter-meeting easing package announced Wednesday. Key will be any openness to further easing (QE, in particular), and their assessment of growth through the first half of the year--we think a recession is now likely,” said TD Securities.

Technical Analysis

GBP/USD sellers can keep aiming for October 2019 high near 1.2415 unless crossing the 61.8% Fibonacci retracement level of its September-December 2019 upside, currently at 1.2560, a break of which could challenge 200-day SMA level of 1.2710.

Additional important levels

Overview
Today last price1.2556
Today Daily Change-12 pips
Today Daily Change %-0.10%
Today daily open1.2568
 
Trends
Daily SMA201.2911
Daily SMA501.2988
Daily SMA1001.299
Daily SMA2001.271
 
Levels
Previous Daily High1.2849
Previous Daily Low1.2491
Previous Weekly High1.3049
Previous Weekly Low1.2741
Previous Monthly High1.3204
Previous Monthly Low1.2726
Daily Fibonacci 38.2%1.2628
Daily Fibonacci 61.8%1.2712
Daily Pivot Point S11.2423
Daily Pivot Point S21.2278
Daily Pivot Point S31.2065
Daily Pivot Point R11.2781
Daily Pivot Point R21.2994
Daily Pivot Point R31.3139

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Editor's Picks

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.


Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations
Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.
BoJ recap: A pause for now... but Japan has entered a new inflation phase
The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.
The 2% inflation target came from a throwaway remark. It now moves trillions
The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.