- GBP/USD struggles to keep pullbacks from six-week low.
- European Commission Vice-President Maroš Šefčovič rushes to meet UK's Michael Gove after Internal Market Bill threatens Brexit treaty.
- US House Speaker Nancy Pelosi warns the British government over plans to break the Good Friday treaty.
- Risk-tone remains sluggish even as traders expect an upbeat economic forecast from the ECB.
GBP/USD attempts recovery from intraday low of 1.2976 to 1.2997 while heading into Thursday’s London open. The cable bounced off the lowest since late-July the previous day after the US dollar stepped back from one-month high. However, cautious moves ahead of the key Brexit talks in London and the upcoming monetary policy meeting by the European Central Bank (ECB) probe the buyers.
IMB versus WAB...
With the UK’s Internal Market Bill (IMB) crossing roads with the Brexit Withdrawal Agreement Bill (WAB), policymakers at the European Union (EU) are furious over the efforts to settle the past agreements. The same pushes them to term the British Prime Minister (PM) Boris Johnson, a wrecker, as per The Times, while rushing to England even as their Brexit negotiator Michel Barnier is already in London discussing the post-divorce trade deal. The key issue is the UK’s adjustments concerning the Northern Ireland border that has been debatable for long.
Not only the EU but the US diplomats are also interested in the Brexit as House Speaker Nancy Pelosi recently warned Britain that breaking the Brexit treaty could imperil trade pact.
Other than the Brexit issues, the increasing numbers of coronavirus (COVID-19) cases in the UK also weigh on the Pound. This pushed the Tory leader to ban social gatherings of more than six people while also making the contact tracing compulsory in pubs and other venues where people meet.
On the other hand, the US policymakers continue to jostle over the much-awaited stimulus package even as the voting on the same is likely to take place on Thursday. Ahead of that the White House Chief of Staff Mark Meadows said, as per Fox Business News, that he is hopeful over more COVID-19 aid from GOP, Democrats.
Elsewhere, market sentiment stays mostly sluggish with S&P 500 Futures turning red after bouncing off a one-month low while Asia-Pacific shares remain mixed.
Moving on, updates from London and the ECB’s monetary policy meeting announcement will be the key. The ECB is more likely to offer no change in current policies and keep forecasts mostly unchanged with expectations of an upward revision to short-term catalysts. Alternatively, odds are rolling on both the direction for the Brexit talks as the recent entry of US comments pushes the Tory government to seriously take their challenge to the EU. Also highlighting the issue are warning from the global rating agency Fitch and ex-PM John Major about the no-deal Brexit.
Hence, London is expected to gain more media space than Brussels and may weigh on the GBP/USD pair. However, the ECB is known for revealing surprises and may supersede Brexit talks in a case of any wild moves.
Technical analysis
Unless bouncing back beyond 1.3135/40 area comprising 200-bar SMA on the four-hour chart and an upward sloping trend line from July 29, buyers are less likely to be convinced. Meanwhile, a downside break of the recent low near 1.2885 will drag the quote to a 61.8% Fibonacci retracement of July 14 to September 01 high, around 1.2860, before highlighting July 21 peak surrounding 1.2765.
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 stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.