GBP/USD: Firmer above 1.2550 despite fears of extended lockdown in the UK

GBP/USD takes the bids near 1.2560, monthly high, while heading into the London open on Tuesday. In doing so, the Cable pays a little heed to the coronavirus (COVID-19) crisis at home as the problems are comparatively larger in the US.

Although the UK’s coronavirus death toll surged beyond 11,000, the pair buyers might concentrate on more than 20,000 from the US, the global epicenter, to cherish upside momentum.

Also supporting the pair’s run-up could be the UK PM Boris Johnson’s exit from the hospital. Though, The Guardian relied on his spokesman to say that He is “focusing on recovery”.

Against the move could be the likely extension of the British lockdown for another month. The Guardian quoted Sir Patrick Vallance, Government Chief Scientific Adviser, while citing expectations that the number of deaths from coronavirus to continue rising this week before hitting a plateau that could last for up to three weeks. It’s worth mentioning that the news also mentioned the lack of medical supplies based on the comments from Chris Hopson, chief executive of NHS (National Health Services) Providers.

Even so, the market’s risk-tone recovers since early-Asia amid hopes of the pandemic to recede in few weeks. While portraying the same, the US 10-year treasury yields rise two basis points to 0.77% whereas stocks in Asia register mild gains by the press time.

While there prevails nothing major on the economic calendar to watch ahead of Wednesday’s likely Brexit talk timetable, virus updates could keep the driver’s seat. It should also be noted that the Fed policymakers have recently been cautiously optimistic and may help the US dollar to recover some of its losses during the US session.

Technical analysis

Having breached 61.8% Fibonacci retracement of March month downside, GBP/USD buyers aim for 50-day and 200-day SMAs, respectively near 1.2580 and 1.2660. However, a daily closing below the said key Fibonacci level around 1.2520 can fetch the quote to a three-week-old rising trend line near 1.2485.