GBP/USD snaps two-day downtrend around 1.3900 despite UK’s Brexit, political jitters
- 28th June 2021
- Posted by: Hakeem
- Category: FOREX MARKET ANALYSIS
- GBP/USD picks up bids from intraday low, up for the first time in three days.
- Hopes of easy unlock due to likely symmetry between Health and Finance Ministry back the buyers.
- Sajid Javid returns after Hancock’s resignation as Health Minister, UK PM Johnson to battle Germany’s push to ban British travelers.
- Sausage war eases but NI protocol, fisheries keep Brexit drama high, Fedspeak awaited.
GBP/USD rejects the US dollar pick-up, bouncing off weekly off, headline into the London open on Monday. In doing so, the cable pair rebounds from intraday low to recently around 1.3887.
Although expectations of early unlock of the virus-led activity restrictions in the UK favor the buyers, the coronavirus (COVID-19) and Brexit fears probe the recovery moves. Also challenging the quote’s upside are the reflation fears that put a safe-haven bid under the US dollar.
Following Matt Hancock’s resignation from the Health Minister’s post, due to harsh criticism for not following the covid guidelines, ex-Finance Ministry member Sajid Javid returns to the Tory team. With Javid’s good linkages with the team under Rishi Sunak, markets do expect a synchronization of efforts to benefit the UK economy’s unlocking.
Additionally, GBP/USD traders do reassess the last week’s dovish outlook of the Bank of England (BOE) policymakers as the British fundamentals remain strong, despite the latest pullback. It’s worth noting UK PM Boris Johnson’s likely arguments with German Chancellor Angela Merkel over her push to ban British travelers, also pose downside risks to the major currency pair.
Alternatively, the easing in the EU-UK sausage war isn’t helping much to solve the Brexit riddle as Irish Taoiseach’s aim to talk with the unionists may renew pressure over the border problems. On the same line, the fisheries issues are also unsolved and probe the sterling buyers.
On a different page, the US dollar index (DXY) stays firmer around 91.84, up 0.05%, after marking the first weekly downside in five by the end of Friday. The greenback gauge seems to benefit from the US Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of Inflation, which jumped to the highest in the near three decades with 3.4% YoY figures in May.
Moving on, GBP/USD traders will observe the UK’s reaction to the latest political and Brexit updates for an immediate reaction ahead of today’s Fedspeak, up for publishing in the US session. Should the Fed policymakers step back on their rejection of the reflation fears, the pair may reverse the latest gains.
Failures to cross the key 1.4000–4010 area, comprising multiple levels since early March, join the GBP/USD declines below the 100-day SMA level of 1.3950 to direct the pair towards the monthly low of 1.3786.
ADDITIONAL IMPORTANT LEVELS
|Today last price||1.3888|
|Today Daily Change||0.0008|
|Today Daily Change %||0.06%|
|Today daily open||1.388|
|Previous Daily High||1.3936|
|Previous Daily Low||1.3872|
|Previous Weekly High||1.4001|
|Previous Weekly Low||1.3787|
|Previous Monthly High||1.4234|
|Previous Monthly Low||1.3801|
|Daily Fibonacci 38.2%||1.3896|
|Daily Fibonacci 61.8%||1.3911|
|Daily Pivot Point S1||1.3856|
|Daily Pivot Point S2||1.3831|
|Daily Pivot Point S3||1.3791|
|Daily Pivot Point R1||1.392|
|Daily Pivot Point R2||1.396|
|Daily Pivot Point R3||1.3984|