- GBP/USD fades recovery moves from 1.3530 even as DXY drops amid broad risk-on mood.
- Doubts over level playing field, financial services weigh on Brexit optimism.
- Trump signs the much-awaited American stimulus package, UK Scientists warn of a surge in hospitalizations.
- Off in Britain, lack of US data/events keeps risk catalysts on the driver’s seat amid a dull day.
GBP/USD cools down the upside momentum, portrayed early in Asia while easing to 1.3560 ahead of Monday’s European open. The cable initially cheered the US dollar’s broad weakness on the passage of the US coronavirus (COVID-19) stimulus. However, uncertainties over the future of the recently signed Brexit deal weigh the quote even as markets are off in the UK.
Bloomberg raises questions about the so-called Canada-style trade deal while raising doubts over the key issues like the level Playing Field, Finance and Gibraltar. On that front, UK’s Financial Minister Rishi Sunak said, per Reuters, “Prime Minister Boris Johnson has admitted it is an accord which does not have as much as he would have liked about the financial services sector and regulatory equivalence. I think (that) will give people that reassurance that we will remain in close dialogue with our European partners when it comes to things like equivalence decisions.”
On the other hand, UK Foreign Secretary Domini Raab suggests Britain’s readiness to clinch trade deals with Australia, the US and Indo-Pacific region now that they’re done with the Brexit deal.
Elsewhere, doctors in London are worried over the jump in the patients while suggesting further worsening of conditions. “Doctors in London said that their hospitals were beginning to resemble a “war zone” and those in Wales put out an urgent call for anyone with experience working in intensive care to come forward to help,” said The Times. The news also mentions covid data while saying that there were 21,683 patients with Covid-19 in British hospitals on April 12, just before numbers started falling. On December 22, the last date with complete data for the whole country, there were 21,286.
Contrary to the uncertainty in the UK, US President Donald Trump’s signing of the American aid package favors the risk amid a light trading session in Asia. US House Speaker Nancy Pelosi tweeted after the decision that the President must immediately call on Congressional Republicans to end their obstruction and to join him and Democrats in support of our stand-alone legislation to increase direct payment checks to $2,000, which will be brought to the Floor tomorrow.
While headlines concerning the US stimulus and virus woes can offer intermediate moves, global markets are likely to remain sluggish during the final week of 2020.
Technical analysis
Rising wedge on the hourly chart, coupled with the multiple pullbacks from 1.3619/24 area join normal RSI conditions to suggest further weakness in GBP/USD prices. As a result, a clear downside break of 1.3525, also piercing off the 200-HMA level of 1.3460, becomes necessary for the bear’s entry.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.