- GBP/USD stays depressed near three-week low, prints four-day losing streak.
- UK aims for gradual exit to lockdown, covid-led deaths drop to the lowest since October.
- UK’s Frost alleges Brussels of ‘ill will’ over Brexit.
- US Senate passed $1.9 trillion stimulus, Treasury yields stay firmer.
GBP/USD holds lower ground near 1.3820, down 0.18% intraday, while heading into London open on Monday. In doing so, the cable respects the US dollar gains amid strong Treasury yields while ignoring optimism at home as the UK unlocks after three consecutive lockdowns.
With 82 coronavirus (COVID-19) related deaths in Britain, the lowest since October 2020, Britain is confident of easing the virus-led activity restrictions. However, routine checks for the schools and colleges test the optimism in the UK. Moving forward, the UK will plan to regain its market share in the US, Germany and China, which in turn will require heavy activities to ward off covid and Brexit-led losses.
Elsewhere, Britain’s Chief Brexit Negotiator David Frost dislikes the European warning to go legal over England’s unilateral extension of Northern Ireland protocol. This pushes him to say, per Sky News, “I hope they will shake off any remaining ill will towards us for leaving, and instead build a friendly relationship, between sovereign equals.”
On the other hand, the US Senate passes President Joe Biden’s $1.9 trillion aid package with 50-49 votes and provides another boost to the reflation fears with an anticipated jump in the money supply. Following that, US 10-year Treasury yields recover late Friday’s losses following upbeat US employment data.
Amid these plays, stock futures print remain mildly heavy whereas the US dollar index (DXY) eases from the highest since November 25, 2020, flashed on Friday.
Looking forward, BOE Governor Andrew Bailey is up for speaking about the economic outlook at a webinar hosted by the Resolution Foundation. Although the latest unlock can help the BOE Boss to reiterate his cautious optimism, which in turn tests the GBP/USD downside, bond bears shouldn’t be ignored for fresh impulse. As a result, the US traders’ reaction to the stimulus news will also be the key to watch.
Technical analysis
A daily closing below the 11-week-old rising trend line, currently around 1.3820, will extend the south-run towards an upward sloping support line from March 2020, at 1.3675 now.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.