- GBP/USD sellers await fresh catalysts amid Brexit optimism.
- Coronavirus concerns, dollar’s demand could cap the cable’s upside.
- Eyes BOE Bailey’s speech, US Jobless Claims and Powell’s testimony.
GBP/USD looks to extend its overnight consolidation phase above 1.2700 into Europe, having faded the recovery momentum near 1.2775 region.
The cable witnessed a good 100-pips price movement on Wednesday, initially falling to the lowest levels since July 23 at 1.2674, as investors fretted over the UK’s nascent economic recovery after Prime Minister (PM) Boris Johnson’s government announced activity restriction on Tuesday to contain the virus spread. Even so, the Kingdom reported 6,178 new infections, the biggest daily jump since May.
Markets witnessed a turnaround in the second half of the day, as buyers returned alongside the renewed optimism on a post-Brexit transition trade deal after the European Union (EU) Chief Brexit Michel Barnier said, “We remain determined to strike a Brexit deal.”
However, the bulls failed to sustain the upside as the Preliminary Markit PMIs showed a slower expansion in the business activity in the UK this month. Meanwhile, the US dollar continued to appreciate amid persistent demand for safe-havens, in the wake of rising virus concerns and tumbling US equities.
In the day ahead, the UK CBI Distributive Trades Survey on realized sales will offer some cues to the pound traders. However, the Bank of England (BOE) Governor Andrew Bailey’s speech and US Jobless Claims will be the key highlights while Fed Chair Jerome Powell’s third day of testimony could also draw some attention.
GBP/USD: Technical levels
“The Doji candle has appeared following a notable sell-off from 1.3483 to 1.2675 and at the 200-day SMA support line. As such, it could be taken to represent seller exhaustion. That said, a bullish reversal would be confirmed if the pair ends Thursday above the Doji candle's high of 1.2777. Alternatively, acceptance below the Doji's low of 1.2675 would imply a continuation of the sell-off from 1.3483,” explains Omkar Godbole, Analyst at FXStreet.
GBP/USD: Additional levels
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