- GBP/USD defends bulls near one-week top, sidelined of late.
- UK pushes for Brexit deal renegotiation, rejects EU proposals over NI protocol.
- Ease in covid infections joins receding virus-led death toll to back the optimists.
- US data, virus updates will be crucial for trade direction.
GBP/USD seesaws around 1.3820, following the heaviest daily run-up in a week, amid Tuesday’s Asian session. The cable pair benefited from the latest reduction in the coronavirus numbers at home, as well as the broad softening of the US dollar, the previous day. However, Brexit woes and cautious sentiment ahead of the week’s key events challenge the pair’s further upside.
The UK’s covid infections dropped to the lowest in over three weeks the previous day to 24,950, per Reuters. Further, the death toll halved to 14 from 28 on Monday, the news said. Even so, a 50% hike in the virus-led deaths in Britain in the last seven days keeps the policymakers cautious. It should, however, be noted that the US keeps travel ban for the UK amid fears over the Delta covid variant’s faster spread and vaccine resistance.
Elsewhere, PM Boris Johnson-led government rejects the European Union’s (EU) efforts to placate tensions over the Northern Ireland (NI) protocol as the UK demands renegotiation of the Brexit deal. In this regard, The Guardian said, “A series of proposals published by the European Commission on Monday with the aim of easing implementation of the Northern Ireland protocol were said to be insufficient for the scale of the problems.”
It’s worth noting that Politico flashes Brexit-positive headlines while saying, “Britain and France today signed a limited post-Brexit security treaty aimed at protecting passengers on Channel ferries from terror attacks.”
On the other hand, the US dollar began the week on a back foot as market sentiment improved over the receding of the COVID-19 numbers as well as soft data at home.
However, cautious mood ahead of Tuesday’s US Durable Goods Orders for June, 2.1% expected versus 2.3% prior, as well as pre-Fed tension weigh on the GBP/USD bulls. It’s worth noting that that the BOE policymakers’ fresh support for the easy-money, recently backed by Gertjan Vlieghe, could weigh on the quote if the Fed chooses to speak tapering on Wednesday.
Read: Durable Goods Orders Preview: Why expectations could be too high, data useful for trading GDP
Technical analysis
Sustained trading beyond 200-SMA level around 1.3720 directs GBP/USD towards monthly resistance line near 1.3850 ahead of challenging July’s top close to 1.3910.
