GBP/USD takes the bids near 1.2955, up 0.33% intraday, while heading into the London open on Monday. In doing so, the Cable pays a little heed to the coronavirus (COVID-19) threats emanating from the UK, as well as Brexit pessimism, while cheering the broad US dollar weakness. Given the light calendar ahead of the Fed policymakers’ comments during the American session, risk catalysts will be the key.
Excerpts from the upcoming speech of British Chief Medical Officer Chris Whitty, shared by Reuters, suggest that the pandemic’s return is not only fading the economic recovery but also pushes the nation towards another lockdown and a “very challenging winter”. On the other hand, London Mayor Sadiq Khan also said, as per the BBC, that they’re “catching up” with Covid-19 hotspots in northern England.
Other than the virus worries, Brexit pessimism is also looming over the Pound traders. Having initially showed readiness to hear the Internal Market Bill (IMB), mainly due to the UK PM Boris Johnson’s offer to ease fisheries, the European Union (EU) is reiterating the warning if London moves ahead to conquer the Brexit Withdrawal Agreement Bill (WAB).
Amid these negative points, a survey report from the Make UK and BDO suggest that the talks of V-shaped recovery are just fanciful.
As a result, UK Finance Minister Rishi Sunak is again stepping forward to help businesses. The news, cited by the Financial Times (FT), indicates an extension of four loan schemes for applications until the end of November.
On the other hand, the US dollar index (DXY) drops 0.27% to 92.75 by the press time as markets await fresh clues to extend the latest greenback recovery amid mixed signals from virus, stimulus and a tussle with China. Adding to the greenback’s problem is its latest tussle with Iran and an on-going tension with Beijing.
Looking forward, a light calendar may keep traders directed to the risk catalysts and hence speech from the UK’s health authorities, at 10:00 AM GMT will be the key to watch.
A daily closing beyond 50-day SMA, currently around 1.3010, becomes necessary for the Cable bulls to target the late-August lows near 1.3055, failing to do so can keep the monthly low of 1.2762 on the bears’ radars.