GBP/USD: Trying not to lose 1.3000 mark despite Brexit, COVID-19 woes

GBP/USD eases from an intraday high of 1.3037, currently around 1.3030, during the initial Asian session on Monday. In doing so, the quote fails to respect the latest price-negative headlines from the UK while struggling to keep the latest gains. The pair benefited from the broad US dollar weakness on Friday despite looming concerns over Brexit and the coronavirus (COVID-19) spread in the UK.

Brexit talks intensify before October 15 deadline, COVID-19 also a problem…

Although UK PM Boris Johnson said French President Emmanuel Macron that they will try out every way to reach a trade deal with the European Union (EU), the Tory leader needs German Chancellor Angela Merkel to “bridge” the significant gaps in Brexit talks. The European Union (EU) negotiators returned to Brussels after an intense round of departure talks, held in London, without any results on Friday. The British government has set October 15 as the deadline for the deal, failing to which a no-deal Brexit scenario will roil the GBP/USD bulls. Though, the latest updates suggest that the UK PM Johnson is also open to the Australia-style departure deal with the bloc.

Not only Brexit but the COVID-19 is also a tough battle for the British leader Johnson to fight. Even if the reproduction number (R-value) recently being between 1.2 and 1.5, a tad lower from last week’s range of 1.3 and 1.6, total cases have surged to 590,00. Also worrisome is the fact that more than 50 people, 65 recently, died in the UK after testing the coronavirus positive during the first 28 days. To win the battle, UK PM Johnson is easing his stance of no national lockdown while trying to keep it safe with local restrictions. A second COVID-19 relief package is an additional weapon used to combat the virus.

On the other hand, US President Donald Trump’s readiness for $1.8 trillion stimulus propelled markets on Friday. Though, US House Speaker Nancy Pelosi rejected the offer and pushed back the bulls during the weekend. Also challenging the market sentiment is a light calendar and mixed messages concerning the US Presidential elections.

Against this backdrop, S&P 500 Futures ease from the five-week high to snap the three-day run-up, currently down 0.15% to 3,471.

Moving on, comments from the BOE Governor Andrew Bailey, at the Citizens' Panel Open Forum hosted by the BOE, will be the key to watch together with UK PM Johnson’s efforts to tame the pandemic at home. Though, off in the US, with stocks open and Treasuries closed, will join a light calendar to restrict GBP/USD moves going forward.

Technical analysis

The 50-day SMA, near 1.3025, holds the key for GBP/USD sellers’ entry, targeting the 1.3000 threshold. Meanwhile, the bulls may wait for a clear break of an ascending trend line from September 16, at 1.3055 now, before confirming the further upside towards the early August top around 1.3185.