- GBP/USD snaps five-day winning streak, reverses from early-February tops.
- Fresh calls to delay Brexit deadline, alter the UK’s approach weigh on the Cable.
- Risk-tone recovers amid global policymakers’ efforts to counter virus implications, China opens Wuhan for travelers.
GBP/USD fails to keep the bids beyond five-week top while declining to 1.3070, down 0.45%, ahead of the London open on Tuesday. Following the folly blown risk aversion wave, traders are paddling back on the sentiment. Also favoring the pullback are fresh doubts over Brexit ahead of Wednesday’s UK budget.
Global policymakers’ efforts to confine the negative implications of the coronavirus (COVID-19) seem to have recently renewed the market’s risk-tone. Among them, US President Donald Trump’s expected stimulus and China’s opening up of the epicenter Wuhan’s borders for travelers are the keys.
That said, the recovery in the US Treasury bonds, as well as the equity futures, likely helped the US dollar to bounce off the multi-month low.
Also favoring the pullback are fresh doubts over Brexit after the EU diplomats, also including some of the opposition Labour Party, raise doubts on the December 2020 deadline amid deal differences, COVID-19 concerns.
On the contrary, the Cable buyers are still hopeful as the BBC reports a bumper £5billion boost for British exports via the first post-Brexit budget, to be released on Wednesday. Earlier during the day, The Sun mentioned that Chancellor Rishi Sunak will also announce relief for salaried employees in his first budget.
Although there are a few economic data/events on the economic calendar, COVID-19/Brexit headlines are likely to keep the present pullback on its track.
Technical Analysis
200-bar SMA on the four-hour chart, near 1.2975, seems to limit the pair’s downside below 1.3000 while any upside below 1.3200-3215 area, including highs marked from January 07, seems to remain doubtful.
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