GBP/USD: Eases from 1-½ month top above 1.2700 amid no-deal Brexit fears
- GBP/USD keeps bounce off 1.2715 despite snapping three-day winning streak.
- The UK Government assumes there will be no trade deal with Europe.
- British PM doubts the availability of virus vaccine before the year’s end, UK scientists warn of a second wave.
- The UK-US trade talk goes smoothly with America praising British ban Huawei, standing with the ally against China.
GBP/USD recedes from 1.2740 to 1.2725 while heading into the London open on Wednesday. In doing so, the Cable step back from the highest since June 10 as fears of a no-deal Brexit renew after the Daily Telegraph backed the news with government sources. Also challenging the pair could be coronavirus (COVID-19) woes and the UK-China tussle. However, bulls remain optimistic as the US dollar stays on the back foot.
Early in Asia, the Daily Telegraph came out with the headlines saying “Britain close to abandoning hope of Brexit trade deal.” The news cites anonymous senior sources in the UK Government to say that the ministers now believe that Britain and the EU will fail to sign a post-Brexit trade deal, with just days to go until Boris Johnson’s July deadline for an outline agreement passes. It’s worth mentioning that the EU-UK negotiators are still on the sixth round of Brexit deal talks as we write.
On the contrary, the UK’s trade talks with the US go as smoothly as expected and the parties suggest a deal without any major hurdles. The reason could be traced from the friendly relations between the leaders of Britain and America as well as the UK’s latest attack on China’s Huawei. Citing this, US Secretary of State Mike Pompeo showed readiness to back the Tory government to counter the dragon nation. Though, British diplomats deny American’s backing to raise bars for Chinese firms from entering 5G run.
Elsewhere, a group of senior scientists warn the Lords, “the government must ramp up its capacity to spot and contain coronavirus outbreaks if it is to avoid a potentially devastating second wave of infections this winter,” per The Guardian. Elsewhere, The Republic World said that the UK’s Prime Minister Boris Johnson has claimed that it is unlikely that a COVID-19 vaccine will be ready by the end of this year. Furthermore, chatters surrounding Russia’s role in the Brexit referendum added political noise to the song.
Talking about the US, pandemic numbers are running fast to reach 4.0 million mark as the policymakers prepare another fiscal boost, taking clues from Europe, to tame the economic disappointment.
Amid all these catalysts, the US 10-year Treasury yields remain sluggish around 0.60% while stock futures keep the previous day’s gains. However, shares in Asia-Pacific linger as amid mixed data and troubles at the respective central banks.
Moving on, a lack of major data/events at the UK will keep focus on the virus and Brexit headlines. During the American session, US housing numbers might entertain the bulls.
Technical analysis
A bearish candlestick formation, Graveyard Doji, on the four-hour chart joins overbought RSI conditions to drag the sellers towards 1.2685-70 region comprising highs marked between June 16 and July 09. Meanwhile, an upside clearance of the June month’s top surrounding 1.2815 will propel the quote towards the February-month lows near 1.2840 and 1.2880 ahead of targeting 1.3000 psychological magnet.