GBP/USD: Mildly bid under 1.2600 as US dollar returns to losses
- GBP/USD reverses the previous day’s losses while extending pullback from 1.2537.
- Easing of lockdown measures in Leicester, hopes of health care funding pleases the bulls.
- UK employment figures flashed upbeat numbers but couldn’t defy broad greenback strength.
- Russia accused of stealing coronavirus data, China’s tussle with the US, UK continues.
GBP/USD escalates the recovery moves to 1.2570, up 0.15% on a day, while heading into the London open on Friday. The Cable recently picked up the bids as risk reset renews the US dollar declines. Also supporting the quote is the easing of lockdown restrictions in Leicester and few other second-tier catalysts. Traders may now look forward to the US Consumer Sentiment data during the easy day with a light calendar.
The US dollar index (DXY), the gauge of the greenback versus major currencies, declines 0.08% to 96.22. The US currency recovered the previous day amid fresh risk-off mood pushing traders towards the safe-haven. Though, a lack of major data and hopes of further stimulus, coupled with the global efforts towards finding the coronavirus (COVID-19) vaccine, recall the USD sellers.
On the other hand, news that the residents in Leicester are allowed mild leeway from the local lockdowns offered additional strength to the pair. Further, updates from Reuters that the UK Prime Minister Boris Johnson is to pour 3 billion pounds into England’s National Health Service (NHS) to try to ward off any resurgence of the coronavirus also favored the quote. Additionally, the Tory Government’s plan to back the internal trade as a free move post-Brexit give GBP/USD buyers another reason to support the long positions.
Alternatively, the UK’s tussle with China, on Huawei Ban, as well as the Sino-American tension keeps the risk-tone sluggish. It should also be noted that the fears of the pandemic, due to the surge in the US numbers, join allegations that Russia steals COVID-19 data attacks the market’s optimism.
Even so, the US stock futures and equities in Asia-Pacific remain mildly bid while the US 10-year Treasury yields seesaw around 0.62% as we write.
Looking forward, a lack of major data/events will keep the pair traders stuck to the news for fresh impetus. Though, the US Michigan Consumer Sentiment Index, expected 79.00 versus prior 78.1, could offer intermediate moves.
Technical analysis
Bulls will wait for a clear break above 200-day EMA level of 1.2590 for fresh entries, until then sellers remain hopeful to attack the monthly low of 1.2480 with 1.2525, comprising 21-day EMA, followed by 1.2500, acting as immediate supports.