GBP/USD: On the back foot below 1.2500 ahead of UK Services PMI

GBP/USD seesaws around 1.2460/65 while heading into the London open on Friday. The Cable reversed from a seven-day top on Thursday as policymakers from the European Union (EU) and the UK called off the Brexit trade deal talks earlier than initially planned on a grim note. Traders are likely to concentrate more on the UK Services PMIs and risk catalysts, like drama over the Hong Kong security law and the coronavirus (COVID-19), for fresh impetus. It’s worth mentioning that US markets are off due to the American Independence Day holiday.

As widely anticipated, the differences between the bloc and Tory leaders didn’t allow the departure talks to go on for the first full week of the planned six-week series. While the EU’s Brexit chief Michel Barnier used harsh words to allege the UK for the stop in talks, British diplomat David Frost conveyed wide differences. Additionally, European Commission President Ursula von der Leyen confirmed that the EU and UK still quite far apart, as far as Brexit deal is concerned.

Other than the Brexit woes, fears of huge job losses in the nation as well as UK PM Boris Johnson’s signal to not stretch the furlough scheme, per evening standard, also weigh on the quote. Furthermore, China now has an additional opponent, the UK, of its rush to command more powers in Hong Kong. Even after the dragon nation’s start warning to the British government on offering citizenship to Hong Kong residents, the Conservative government said that we’re firm in our decision. It's worth mentioning that hte UK's GfK Consumer Confidence surged to the strongest levels since the lockdown started.

Elsewhere, record-high virus numbers in the US and North Korea’s opposition to the American interference in China’s Hong Kong matter exerted downside pressure on the market’s risk-tone. While portraying the same, S&P 500 Futures mark 0.20% loss to 3,123 whereas stocks in Asia dwindle as we write.

Moving on, the UK Services PMI for June may confirm the initial reading of 47.00 and could keep the GBP/USD pair sellers happy. However, any more weakness of the US dollar, mainly due to the virus and/or tussle with China, might help the greenback to recover the latest losses.

Technical analysis

Thursday’s bearish pin bar below 21-day SMA keeps the sellers hopeful. In doing so, the sellers may target June 29 top surrounding 1.2390 during the fresh downside. However, the last month’s low close to 1.2252 could restrict further weakness. On the contrary, the pair’s upside break of 21-day SMA level of 1.2514 won’t immediately call the bulls as June 24 high close to 1.2545 will become additional resistance to watch.