GBP/USD prints losses below 1.2500 as trade sentiment turns heavy

GBP/USD extends Friday’s losses amid broad risk aversion.
US President Trump criticizes China’s mishandling of the virus, threatens to end the trade deal.
Tories under pressure to reveal lockdown exit plan, UK risks losing world-renowned science sector.
A light economic calendar keeps qualitative catalysts in the driver’s seat.

Anil Panchal FXStreet

GBP/USD drops to 1.2460, down 0.36% on a day, while heading into the London open on Monday. Other than the broad US dollar strength, amid US-China tussle, challenges to the UK PM Boris Johnson-led government also weigh on the Cable.

The US President Donald Trump fired shots against China for its mishandling of the coronavirus (COVID-19), while backing his arguments by an intelligence report. The Republican leader went on to use the pressure towards warning the dragon nation over the US-China trade deal if the later fails to buy US goods.

In response to the US claims, China’s Global Times said that US Secretary of State Mike Pompeo’s anti-China bluff strategy reveals an all-or-nothing mentality to fool US voters.

Looking at the UK’s pandemic stand, the Tory government is near to rollout health passports and will soon begin drug trials in the hospitals. However, the opposition is still criticizing the ruling party after the SKyNews reported, “Cabinet minister Michael Gove admits the government will have "made mistakes" in the early stages of the coronavirus outbreak.”

The British lawmakers are debating in the House of Commons on the Health Protection (Coronavirus, Restrictions) Regulations and are likely not to ignore comments from the World Health Organisation epidemiologist. Dr. Maria van Kerkhove told the BBC the UK needed to stay vigilant as it eases its coronavirus lockdown.

Also likely to gain fire from the opposition could be the UK’s tough stand against the EU as the Guardian mentions, “the future of Britain’s world-renowned science sector – and its ability to lead global research into Covid-19 – risks being fatally undermined if the UK crashes out of the EU without a trade deal by the end of this year.” Even so, the European Union (EU) is likely to remain pressured as the US and the UK are likely to have a good trade deal.

Amid all these plays, the market’s risk-tone sentiment remains heavy with the US stock futures flashing losses over 1.0% and helping the US dollar to stay strong across the board.

Moving on, the US-China trade stories, Brexit and virus updates could keep the Cable traders busy despite having a light economic calendar for the day.

Technical analysis

An ascending trend line from April 21, around 1.2410 limits the pair’s immediate downside ahead of diverting the bears towards the late-April low surrounding 1.2250/45. Meanwhile, a falling trend line from Thursday’s top, at 1.2515 now, can guard the pair’s recovery moves before highlighting 1.2600 on the bulls’ radars.

Author

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.

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