GBP/USD: Bounces off six-month low to cross 1.2100 amid US dollar pullback
- GBP/USD benefits from the US dollar’s broad correction after the heavy run-up.
- Coronavirus cases in the UK rallies to 71, £330 billion aid considered a large sticking-plaster.
- EU-UK trade talks canceled, for now, likely delaying the Brexit deadline.
Given the US dollar bulls catching a breath after the greenback’s spectacular rise the previous day, GBP/USD recovers 0.47% from its multi-week low to 1.2115 while heading into the London open on Wednesday.
Coronavirus (COVID-19) outbreak gains pace in the UK as the latest death of the 45-year-old propels the count to 71 with expectations of 55,000, as per The Sun, being infected.
The UK Chancellor Rishi Sunak announced £330 billion stimulus the previous day while the UK PM Boris Johnson compared the fight against the virus to a wartime preparations. Even so, the measures are considered less catchy while compared to the US attacks on the COVID-19.
Further, the Financial Times cites the UK Government sources to confirm the cancellation of the next round of Brexit negotiations that were to start from today. The report also raised doubts over the UK PM Johnson’s Brexit deadline of December 31, 2020, even as No10 defies any such claims.
Over the counter, the US is active from all the fronts, be it government or the Fed, to make sure that the world’s largest economy doesn’t get economy infected due to the deadly virus. While the greenback cheered the moves on Tuesday, the early-day pullback could have taken clues from US Treasury Secretary Steve Mnuchin that the inaction could shoot the Unemployment Rate to 20%.
Risk-tone remains mostly mixed with the US treasury yields bouncing back above 1.00% while Asian stocks flashing different numbers.
Investors will now take clues from the coronavirus relating headlines while the US Senate voting on President Donald Trump’s major stimulus plan as well as the UK PM’s action will be in the spotlight.
Technical Analysis
A weekly falling trend line near 1.2145/50 offers immediate upside barrier while the bears will wait for a sustained downside break below September 2019 low near 1.1960 for entry.