GBP/USD refreshes multi-week top beyond 1.3100 despite Brexit/virus woes

  • GBP/USD stays bid near the highest since March 9, 2020.
  • Broad US dollar losses supersede downbeat coronavirus updates, fears of no-deal Brexit.
  • The UK announced more local lockdowns after infections surge the most in over a month.
  • China says UK ‘poisoned’ relation, should stay away from Hong Kong issues.

GBP/USD rises to 1.3130, up 0.26% on a day, while heading into the London open on Friday. The Cable earlier surged to the stronger since March 2019 despite the UK government’s announcement concerning local lockdown and Brexit-negative news. The reason could be traced from the US dollar’s broad weakness. Given the absence of major British data/events, traders will have to follow risk catalysts and the second-tier statistics from the US for fresh impetus.

During the early Asian morning, the Tory government announced major lockdown covering Greater Manchester, East Lancashire and parts of West Yorkshire as the coronavirus (COVID-19) wave 2.0 strengthens in Britain. UK Health Secretary Matt Hancock terms an increasing rate of transmission in these areas as the key reason for the latest action. Official data on Thursday, as per Reuters, showed 846 new positive tests in Britain – the highest number of daily infections since June 28.

On the other hand, the Financial Times (FT) quoted the Confederation of British Industry (CBI) while warning that one-fifth of companies say planning for the end of the transition period has gone backward. This increases pressure on the Tory government to ease their strings over the fishing issue that has lately been pushed by the bloc negotiators as far as the Brexit talks are concerned.

Elsewhere, China’s ambassador to the UK, Liu Xiaoming, said that the actions of the UK, including questions over alleged rights abuses in China’s Xinjiang region, had "poisoned" the relationship between the two nations.

Talking about the US side, President Donald Trump’s push for a delay in the November month’s Presidential Elections failed to get any good response and the uncertainty over the fiscal plan remains. White House Chief of Staff Mark Meadows turned down any scope of the deal soon even if the Republican Senate leader Mitch McConnell showed chances of agreement on the unemployment claim benefits.

Other than the political and fiscal pessimism, rising pandemic cases in America also drags the US dollar index (DXY) to the fresh lows since May 2018. The greenback gauge currently takes rounds to 92.65, down 0.34% on a day, following its drop to 92.54.

Markets’ risk-tone remains heavy with stocks in Asia-Pacific and the US 10-year Treasury yields flashing red, mostly, whereas the US S&P 500 Futures receding the early-day gains to 3,256.

Moving on, the US Chicago Purchasing Managers’ Index and Michigan Consumer Confidence Index will decorate the calendar amid a lack of data/events from the UK. However, major attention will be given to the qualitative signal and the US dollar moves for fresh direction.

Technical analysis

With a clear break of a downward sloping trend line from December 31, 2019, gaining support from the bullish MACD, GBP/USD prices are all set to attack 1.3200 level ahead of challenging 1.3215 and December 31, 2019 top near 1.3285. Meanwhile, overbought RSI conditions push the traders to remain cautious if the quote slips below the resistance-turned-support of 1.3020. Though, sellers may wait for a confirmation below 1.3000 while targeting June month’s high of 1.2813.

 

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