GBP/USD stays depressed around 1.3200, coronavirus, Brexit jitters poke yearly low
- GBP/USD fades corrective pullback from 2021 bottom, down for third consecutive day.
- EU barred UK from Horizon research scheme on ‘trust’ issues, Christmas spirit challenged on Brexit deadlock.
- Britain announced fresh virus-led activity restrictions called “plan B”.
- Second-tier US data, risk catalysts are important for near-term directions.
GBP/USD hovers around 1.3200 following a failed attempt to bounce off the 2021 bottom, marked the previous day, during the initial Asian session on Thursday.
The cable pair refreshed multi-day low after the UK announced fresh measures to tame the spread of the coronavirus. Also adding to the quote’s weakness were the Brexit headlines and firmer US Treasury yields.
Having witnessed a doubling of the COVID-19 variant cases in 2-3 days, UK PM Boris Johnson announced that the UK will move to Covid-19 "plan B". The fresh measures include guidance to work from home, face mask requirements for visiting public venues and push for the National Health Services (NHS) Covid Pass.
On the other hand, concerns that the Brexit tussle between the European Union (EU) and the UK is likely to weigh on the supply-chains and roil Christmas gained momentum. The latest Brexit-negative headlines were shared by The Telegraph that said, “The United Kingdom has been shut out of the Horizon research scheme because the European Union does not "trust" the British Government.” The UK news adds, “The British access to the £77billion program was confirmed during the Brexit negotiations but has been pushed back after the two sides locked horns over key issues this year.”
It’s worth noting that the firmer US Treasury yields, backed by upbeat second-tier US employment-linked data, exert additional downside pressure on the GBP/USD prices. Also favoring the bears were fears emanating from the latest diplomatic tensions between the US and Russia, as well as Sino-American tussles.
While Brexit and the covid headlines are the keys to determining short-term GBP/USD moves and are likely to keep the bears hopeful, Friday’s US Consumer Price Index (CPI) data and other risk catalysts are important to watch as well.
Technical analysis
A downward sloping trend line from late October directs GBP/USD prices towards December 2020 lows near 1.3130.
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.
