GBP/USD snaps three-day uptrend to revisit 1.3850 on Brexit, coronavirus fears
- GBP/USD consolidates recent gains around monthly top, teases intraday low of late.
- Brexit blamed for labor, food shortage, key members ask for "proportionate and structured" over NI border.
- Virus infections, death toll increase in the UK but policymakers are yet to decide over jabbing of 12–15 years children.
- Off in the US can restrict market moves but mild risk-off keeps intraday sellers hopeful.
GBP/USD takes offers around 1.3850 while marking the first daily loss in five heading into Monday’s London open. In doing so, the quote refreshes intraday low while flashing 0.18% downside on a day.
The coronavirus woes and an off in the US join a light calendar to weigh on the market sentiment, underpinning the US dollar. Also negative for the GBP/USD prices are the headlines covering the Brexit fears and tax-hike in the UK.
“Business leaders, trade unions and academics have urged the UK and the EU to deliver ‘balanced, bespoke and reasonable’ solutions to tensions caused by the post-Brexit trade arrangements for Northern Ireland,” said the BBC. On the same line, fears of food and manpower shortage escalate, which in turn pushes the Confederation of British Industry (CBI) to relax immigration rules to fix jobs squeeze, per Reuters. The piece also quotes the CBI as saying, “The government had also failed to follow official advice on which jobs should qualify for shortage status, and rules on what kinds of training qualified for support under a government apprenticeship scheme were also too restrictive.”
On a different page, the UK Times has the headline suggesting UK Prime Minister (PM) Boris Johnson will push through a rise in national insurance to fund social care.
Elsewhere, the UK reports an easing in daily figures but the weekly numbers are a bit high as the policymakers jostle over booster shot and vaccinations of children of 12–15 years. “The UK has recorded 37,011 new COVID cases and 68 more coronavirus-related deaths in the latest 24-hour period, government data shows. The figures compare with 37,578 infections and 120 fatalities reported yesterday, while 33,196 cases and 61 deaths were announced this time last week,” said the Sky News.
In addition to the Brexit and covid woes, global economic fears, recently underpinned by the US jobs report for August, exert additional downside pressure on the GBP/USD prices.
Given the lack of major data/events, as well as the UK holiday, GBP/USD may extend the latest pullback moves as the US Dollar Index (DXY) attempts recovery on mildly cautious sentiment.
Technical analysis
Although a bearish cross between the 200-DMA and 50-DMA backs the latest pullback moves, a downward sloping trend line near 1.3825, followed by the stated moving average surrounding 1.3815-05, challenges the GBP/USD bears.
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.
