GBP/USD stays firmer above 1.2400 ahead of Brexit talks

GBP/USD stays positive so far during the week’s start.
UK PM Johnson announced the easing of lockdown restrictions from level four to three.
One-week-long Brexit talks begin today, fisheries remain as a tough nut to crack.
Risk-tone dwindles amid mixed trade/virus updates.

Anil Panchal FXStreet

GBP/USD takes the bids to 1.2432, up 0.16% on a day, while heading into the London open on Monday. The pair earlier cheered the UK PM Boris Johnson’s lockdown statements while US dollar weakness seems to please the buyers off-late. Amid a light calendar, Brexit talks will be the key catalyst for the Cable. Though, trade/coronavirus (COVID-19) updates will also be the key.

It should also be noted that the expectations surrounding an extension of wage aid on Monday, as per The Telegraph, also favored the pair's run-up during the early Asian session.

UK PM Johnson stepped back from “Stay at Home” to “Stay Alert” while easing lockdown restrictions from level four to three of the new five-tier ranking system with level one meaning coronavirus is no longer present, per The Guardian.

The Tory Leader announced that those who cannot work from home and so can join from Monday while the rest may start adding to the works starting from Wednesday. Further, schools for pupils aren’t expected to start before June 01 whereas “some hospitality places” could be open in July.

On the other hand, US President Donald Trump renewed the US-China tension by again alleging the dragon nation for the virus outbreak, which in China defied roughly.

Elsewhere, Reuters said that Britain’s COVID-19 death toll has risen by 269 to 31,855, according to figures announced on Sunday by the Department of Health.

Traders are now waiting for the third round of Brexit negotiations between the UK and European Union (EU). The Financial Times (FT) has already suggested a rough start with Brussels likely pushing UK over the detailed talks on access to UK fishing waters and other top EU priorities this week. However, the UK PM Johnson has earlier ruled out any agreement that guarantees EU fishermen's long-term access to British waters, insisting the focus should be on annual negotiations, per the FT.

Hence, weeklong trade negotiations are likely to kick-start with a storm and might weigh GBP/USD on the Cable unless anything positive arrives, which becomes less expected.

Technical analysis

50-day EMA near 1.2470 restricts the pair’s immediate upside moves toward April 30 high near 1.2645 whereas April 21 bottom close to 1.2250/45 offers short-term support.

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.

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