- GBP/USD trims early-day gains after touching Friday’s top of 1.2954.
- Fears of harsher lockdown in England, downbeat comments from UK Chancellor Sunak favor bears.
- Two more rounds of Brexit talks will be held as a final kick to avoid no-deal departure.
- US President Donald Trump sounds upbeat in the latest video, concerns over dexamethasone usage challenge bulls.
GBP/USD drops to 1.2938, down 0.05% intraday, while heading into the London open on Monday. The Cable earlier surged to the exact high of 1.2954 flashed the previous day. However, fears of the coronavirus (COVID-19) outbreak and downside impacts of the same, as conveyed by the UK’s Chancellor Rishi Sunak, seems to weigh on the quote. With this, traders seem to ignore recovery in US President Donald Trump’s health from the COVID-19 as well as the recent meeting between British PM Boris Johnson and EU Commission President Ursula von der Leyen that agreed to stretch Brexit talks by one more month.
Although UK PM Johnson said he “can live with no-deal Brexit”, the Tory leader agreed to have one final push to avoid a bitter departure from the European Union (EU). As a result, the bloc’s negotiators will visit London this week before the British counterparts visit Brussels ahead of the October 15-16 EU summit. At the end of the final scheduled departure negotiations in Brussels, completed last week, policymakers from the EU and the UK both cited ‘significant gaps’ over the trade deal.
Elsewhere, The Guardian came out with the news, relying on a leaked government paper, to mention about possibilities of a three-way lockdown in England. Following that, the British Finance Minister Sunak crossed wires, via The Sun, to convey possible economic and social costs of lockdowns.
On the other hand, US President Donald Trump is recovering from the COVID-19 infection and shared a video, coupled with a short drive outside Walter Reed, to prove the same. However, the usage of a drug linked to steroid dosage worries traders about the issue of the US leader at a time when Presidential Election is a month away and stimulus deadlock looms.
Amid all these plays, S&P 500 Futures gain over half a percent whereas stocks in Asia-Pacific remain mostly up.
Looking forward, comments from the BOE’s Chief Economist Andy Haldane and the final reading of September month’s UK Services PMI, expected to rise to 60.1 from 55.1, can offer immediate direction to GBP/USD. Also on the economic calendar is the US ISM Services PMI for September, forecast 56.00 versus 56.9 prior. However, major attention will be given to US President Trump’s health for near-term market moves.
Technical analysis
The pair marks another day below a descending trend line stretched from September 09, at 1.2965 now, which in turn suggests further weakness towards testing the 21-day SMA and 50% Fibonacci retracement of June-September upside, close to 1.2870.