GBP/USD snaps two-day losing streak to regain 1.3100 amid risk-on sentiment
- GBP/USD extends pullback from 1.3059/58 to probe intraday high.
- US dollar trims some gains as market optimism diverts funds to equities, ex-USD currencies.
- Hopes of virus treatment/vaccine join Sino-American trade deal news to favor the risk-on momentum.
- US data can entertain traders but risk catalysts will be the key ahead of the Jackson Hole Symposium.
GBP/USD bulls regain the reigns as the Cable rises to 1.3105 before Tuesday’s London open. The quote dropped during the previous two days amid Brexit pessimism and the broad US dollar strength. However, the recent risk-on mood, backed by trade/virus headlines, pulls the greenback downwards. Though, markets will wait for the American data for fresh impetus as the economic calendar has a few important factors to watch during the European/UK session.
With a dialogue between the US and Chinese trade representatives renewing optimism surrounding the phase one deal, markets paid a little attention to the American health official’s warning to Trump administration’s rush for coronavirus (COVID-19) vaccine. Market sentiment cheered the US policymakers’ push for the pandemic’s cure on Monday, which in turn favored the US dollar. Additionally, news that the virus cases in Florida and the UK are receding off-late added to the risk-n sentiment at the start of the week.
On the other hand, failure of the seventh and final scheduled Brexit talks defied the cautious optimism of British business houses, as showed by the government data. Also weighing on the quote could be French retaliation to the UK’s “no go” list. The European major imposed a 14-day quarantine on the people traveling from the UK.
Elsewhere, Facebook awaits good news from UK Chancellor Rishi Sunak even if PM Boris Johnson has earlier showed readiness to fine the company.
Against this backdrop, futures on S&P 500 and FTSE 100 mark gains whereas Asia-Pacific shares also keep the previous day’s run-up. Further, the US 10-year Treasury yields add two basis points (bps) to 0.66% by the press time.
Looking forward, the US Consumer Confidence and second-tier housing data may decorate the calendar whereas Britain’s CBI Distributive Trades Survey for August, expected 8% versus 4% may offer intermediate moves to the pair. However, major attention will be given to Friday’s Jackson Hole Symposium speech by the BOE Governor Andrew Bailey.
Technical analysis
21-day EMA and an ascending trend line from August 04 restricts the pair’s short-term downside around 1.3040/35 while 1.3200 becomes nearby important resistance.