GBP/USD snaps three-day fall above 1.3600 on Brexit, BOE chatters, Fed eyed

• GBP/USD refreshes intraday top, extends bounce off three-week low.
• UK PM Johnson downplays Brexit-led fishing row with France ahead of Thursday’s talks in Paris.
• Markets rethink over BOE rate hike calls, UK prints highest virus-led death toll since February.
• UK/US data to entertain buyers ahead of key Fed verdict.

GBP/USD cheers the US dollar pullback heading into Wednesday’s London open, up 0.14% on a day around 1.3630. In doing so, the cable pair refreshes intraday high while printing the first positive daily performance in four, not to forget bouncing off a three-week low.

In addition to the market’s preparation for today’s US Federal Reserve (Fed) verdict, the quote benefits from UK PM Boris Johnson’s comments suggesting an easing Brexit tussle with France. “Boris Johnson downplayed the significance of a rift between the U.K. and France over post-Brexit fishing licenses, calling the issue ‘vanishingly unimportant’ compared with efforts to limit global warming,” said Bloomberg. It’s worth noting that UK’s Brexit Minister David Frost has already accepted the French invitation to visit Paris for further Brexit talks, especially after France warned to bloc UK vessels.

Elsewhere, chatters relating the Bank of England’s (BOE) rate hike also swirl and propel the GBP/USD prices. “The arguments for and against the Bank of England raising its policy rate this Thursday are finely balanced. But ultimately members of the central bank’s Monetary Policy Committee should hold off and wait,” said the Financial Times (FT). On the same line, Reuters highlights a 5.0% inflation print of the UK, versus BOE’s 2.0% target, to highlight the probabilities of a rate change by the “Old Lady”.

Amid the aforementioned catalysts, the cable prices seem to ignore the UK’s higher coronavirus-led death toll since February. “The UK has had its highest number of daily Covid deaths reported since late February, as another 293 people have died within 28 days of a positive Covid-19 test,” per The Guardian.

It should be observed that comments from US Senator Joe Manchin add to the market’s hope of stimulus and weighing on the US dollar, indirectly helping the GBP/USD prices. Senator Manchin said, per CNN, to have chief concerns that will need to be addressed in order to secure his vote for the $1.75 trillion economic package. The policymaker was cited expressing new optimism that a deal could ultimately be reached that would win his support on President Joe Biden's domestic agenda before Thanksgiving.

Looking forward, final prints of the UK’s October Services PMI, expected to confirm 58 forecast, may offer immediate direction ahead of a slew of the US data and the Fed decision. Among the US data, ADP Employment Change, ISM Services PMI and Factory Orders will be the key while the Fed is expected to keep the benchmark rate unchanged but taper monthly bond purchases by $15 billion.

Read: Fed Interest Rate Decision Preview: Inflation, employment and interest rates

Technical analysis

Although lows marked during August and July, respectively around 1.3600 and 1.3570, restrict short-term GBP/USD declines, corrective pullback needs to cross the previous support line from October 04, near 1.3670 to convince the buyers.