- GBP / USD peaked at five weeks before returning to 1.2566.
- The death toll from coronaviruses in the United Kingdom has reached the critical point, Prime Minister Boris Johnson takes charge of the procedure.
- Fishing has provided a difficult start to Brexit negotiations, as expected, EU Barnier is still proposing a two-year extension of the deadline.
- The US dollar was strongly offered in a climate of risk, a busy day for traders.
GBP / USD consolidates latest gains around the five-week high while bringing offers close to 1.2585, up 0.27% on a day, before London opens on Wednesday. In addition to the slightly positive UK stocks, the general weakness of the US dollar favors the last run-up of the pair. However, cable traders are awaiting further developments from the ongoing Brexit talks, as well as PMI UK Services, for a further boost.
In addition to the expected break in the Brexit impasse, British Prime Minister Boris Johnson’s rush to take control of the action of the coronavirus (COVID-19) also pleased cable buyers in early Asia. While pressure from European Union (EU) chief negotiator Michel Barnier to extend Brexit has rekindled concerns over a soft Brexit, an increase in the number of virus deaths to 50,000, most high in the world, urged the British Prime Minister to take charge of things on Tuesday.
It is worth mentioning that the EU has used other means to push the UK to agree on fisheries issues. The Guardian said: “The British fishing industry has accused the EU of using a” nuclear option “to obtain a Brexit deal, warning that it is ready to be blocked by the French if trade negotiations fail “.
Elsewhere, Nissan’s global chief operating officer, Ashwani Gupta, told the BBC that the British plant is still under threat from Brexit without a deal, while British Prime Minister Johnson is now signing to maintain ties with Hong Kong. The conservative leader is also said to offer hope of refuge to 3 million Hong Kongers, as reported by the Times and the South China Morning Post.
On the other hand, US President Donald Trump has gone back on previous fears of a major military use to combat protests against the alleged murder of Minnesota George Floyd.
As a result, the risk tone of the market remains positive as equities in Asia and yields on 10-year US Treasuries regain their previous strength, which in turn pushes the US dollar index (DXY) to new lower since early March.
Traders are now waiting for the British services PMI for May, expected 28 vs. 27.8, while keeping their eyes on the headlines of Brexit. It should also be noted that the American calendar is cumbersome to follow during the last part of the day. In this regard, Westpac said: “In the United States, Westpac predicts that the ADP private payroll survey will show that another 8 million jobs were lost in May. Factory orders (f / c market -13.4%) and durable goods orders (final, f / c market -17.2%) should confirm that investment and related orders cratered in April. Finally, the ISM non-manufacturing survey in May should reveal a modest recovery to 44.4. “
The pair of sires will wait for a clear break above the 100-day SMA level of 1.2575 to probe the April high near 1.2650. However, a 200-day SMA level close to 1.2675 could further challenge the bulls. Meanwhile, bears are less likely to enter unless the price slips below 61.8% of its Fibonacci retracement of its month of March, around 1.2520.