GBP/USD registers three-day winning streak amid Brexit drama
- GBP/USD benefits from the USD weakness, ignores pessimism surrounding the BOE’s likely rate cut.
- EU, Ireland spread Brexit pessimism, US-China trade deal fails to excite the market.
- US Retail Sales, trade/Brexit news will be in focus.
GBP/USD takes the bids to 1.3050 while heading into the London open on Thursday. The pair recently benefited from the US dollar (USD) weakness. In doing so, it ignores the downbeat fundamentals at home that increase the odds for the Bank of England’s (BOE) rate cut and dims Brexit optimism.
The tough time for Brexit and UK PM Johnson…
While markets cheered the UK PM Boris Johnson’s stark majority in the latest generally election, optimists are taking the back seat as the Members of the European Parliament (MEP) and Irish PM Leo Varadkar indicate the tough time for the Conservatives’ leader.
The MEPs “backed a resolution by 610 votes in favor to 29 against with 68 abstentions criticizing the UK’s handling of the situation. The resolution also stressed that their approval of the Brexit deal later this month would depend on new assurances being given from the UK side,” says the Independent. On the other hand, the BBC mentions that the taoiseach Leo Varadkar has called for "a level playing field" in the Brexit negotiations when meeting the European Commission president Ursula Von Der Leyen.
Hence, the upcoming Brexit negotiation period will be the key for the UK PM to prove his words as the regional leaders have already expressed grave concerns about any developments within the deadlines.
Elsewhere, Iran has criticized the UK, France and Germany while also threatened the European soldiers. Though, the same fails to grab major attention.
With this, the market's risk-tone stay mostly sluggish amid mixed sentiment concerning the US-China trade deal and Brexit. The US 10-year treasury yields take rounds to 1.79% whereas the Asian stocks mark mild gains.
On Wednesday, the Cable failed to portray downbeat UK CPI figures’ implications as the greenback kept the weakness amid receding safe-haven demand. The US-China trade deal, receding odds of the US-Iran war could be considered as catalysts for the same.
Traders may now have to concentrate more on the trade/Brexit headlines for fresh direction as there is no major data/event on the British economic calendar. However, the US Retail Sales could please traders afterward.
Technical Analysis
21-day SMA level of 1.3065 and a falling trend line since December 13, at 1.3095, restrict pair’s near-term upside whereas an upward sloping trend line from November 22, around 1.2970 now, keep the downside limited.