GBP/USD stays depressed below 1.3900 on mixed Brexit, covid concerns

GBP/USD bears keep the reins, following the latest failures to bounce off a one-week low, around 1.3880 during the initial Asian session on Tuesday. In doing so, the cable fails to justify recently positive updates concerning Brexit as mixed news over the coronavirus (COVID-19) disappoint buyers amid sluggish hours.

Although Sajid Javid’s confidence over July 19 deadline to unlock the UK keeps GBP/USD buyers hopeful, the latest covid numbers weigh on the quote. As per the latest official figures for Monday, UK reported the highest daily infection since January 30, adding 22,868 cases to the total of 4,755,078.

The latest jump in virus cases, also the covid variants, earlier propelled Germany to signal ban over British travelers before the latest news from The Guardian said, “Talks progressing on recognition of status certificates, while German calls for caution failing to win support.” Hong Kong also hints at the ban on UK flights. Additionally, the virus woes pushed London policymakers to cancel the much-awaited Hard UK event.

On the other hand, European Commission Vice President Maroš Šefčovič recently sounds confident of overcoming the chilled meat issue with the UK. BBC said, “The EU's chief Brexit negotiator says he is 'confident' a solution can be found in the next 48 hours over a possible ban on chilled meat products from GB being sold in NI.” The Times also flashed positive headlines while saying, "Brussels is expected to announce a further 'grace period' of at least three months to allow sausages and other processed meat made in Britain to be sold in Northern Ireland (NI)."

Furthermore, the Channel Island’s ability to avoid the immediate Brexit tussles with the French fishers by a last-minute extension to post-Brexit transition arrangements on fishing also sounds optimistic, at least for now.

Alternatively, a light calendar heading into Friday’s US NFP and quarter-end positioning restrict market moves even as Fedspeak keeps rejecting the reflation fears and US President Joe Biden lauds his infrastructure spending passage.

Amid these plays, S&P 500 Futures struggle for a clear direction after refreshing the record top whereas the US 10-year Treasury yields dropped the most in over a week while revisiting the 1.48% level.

Moving on, qualitative catalysts become the key for GBP/USD traders while UK Nationwide Housing Price s and Consumer Credit, not to forget M4 Money Supply, may offer intermediate moves.

Technical analysis

GBP/USD remains pressured below 100-day EMA and a 13-day-old descending resistance line, respectively around 1.3900 and 1.3920. Hence, the pair’s further losses towards the monthly low of 1.3786 can’t be ruled out.