Fears of a major virus outbreak, short on capacity to test covid symptoms weigh the quote.
Tory MPs told to back Brexit trade deal next week amid progress in talks
over fisheries, EU policymakers remain apathetic.
UK’s final reading on Q3 GDP, US stimulus passage can direct immediate
moves.
GBP/USD refreshes intraday low to 1.3380, down 0.52% on a day, during
the three-day downtrend ahead of Tuesday’s London open. The Cable slumped to
the lowest since December 11 the previous day before bouncing off 1.3188.
While the coronavirus (COVID-19) strain and no Brexit positives from the
European Union (EU) can be termed as the major drawbacks for the Cable, the US
dollar’s broad gains over the nearness to the covid stimulus also weigh the
quote. Moving on, Sterling traders will keep their eyes on the passage of the
US aid package and the final version of the Q3 2020 UK GDP for short-term
direction. Though, major attention will be given to the Brexit and covid
headlines.
Although major drug producers and the European Medicine Agency (EMA)
assure no major threats from the fresh covid variant, over 40 countries have
cut down UK travels and PM Boris Johnson is under pressure, per The Guardian,
to recall the national lockdown. Also on the negative side are the chatters,
backed by the Financial Times (FT), suggesting the UK may not have enough
coronavirus test kits to meet surging demand in the coming weeks, according to
an internal government document, as the new strain of Covid-19 sends cases
soaring. “The forecast that demand could exceed 700,000 tests a day, when
capacity currently stands at 650,000, was made before the effect of the new
strain of Covid-19 was fully understood,” said the news further.
On the other hand, The Telegraph came out with the report indicating
that the British Members of the Parliaments (MPs) are pushed to back the Brexit
trade deal during the next week after UK PM Johnson shows readiness to
compromise over fisheries demand. However, the EU diplomats were spotted
saying, “there’s still a no from us.”
Contrary to the EU and the UK policymakers, the US Congress members are
ready with the much-awaited covid aid package and the government funding. After
crossing the House, the $2.3 trillion fund flow appeal has enough votes in the
Senate to reach President Donald Trump’s desk.
Amid these plays, stock futures remain pressured whereas the US 10-year
Treasury yields decline 1.3 basis points (bps) by press time.
While the confirmation of the initial Q3 GDP figures of 15.5% QoQ and
the passage of US stimulus can probe the GBP/USD pair for now, pessimism over
Brexit and the virus can’t stop the sellers for long.
EUR/USD
EUR/USD retreats towards 1.2200 ahead of the European open, having
failed to find acceptance once again above the 1.2250 barrier.
The pullback in the main currency pair can be mainly attributed to the
resurgent haven demand for the US dollar against its key rivals, as markets
fret over the new covid strain found in the UK and its impact on the global
economic recovery.
The US dollar index bounced-off the 90.00 support area, now trading
around 90.25, up 0.24% on a daily basis. Meanwhile, the spot trades near-daily
lows of 1.2218, down 0.19% on the day, as of writing.
The dollar’s recovery outweighs the fresh gains in the EUR/GBP cross,
fuelled by the latest leg down in GBP/USD, as virus and Brexit concerns
continue to overwhelm the pound traders.
Further, the dollar bulls cheer the passage of the USD900 billion covid
relief stimulus package and government funding bill in the US Congress, as they
await the US final GDP figures for fresh impetus.
Gold (XAU/USD)
Gold (XAU/USD) witnessed good two-way businesses on Monday, as traders
danced to the tune of the optimism on the agreement of a US stimulus deal in
the first half of the day.
Meanwhile, in the latter part of the day, gold slumped nearly $50 from
weekly tops of $1907 to $1855 levels on the narrative of a new covid strain
found in the UK, which fuelled heavy risk aversion across the board and pumped
the greenback against its major rivals.
Gold is trying hard to extend the overnight recovery, facing stiff
hurdle at the horizontal 50-hourly moving average (HMA) at $1884.
The bearish crossover spotted on the said timeframe is likely capping
the upside attempts in the spot. The 21-HMA crossed the 50-HMA from above
post-Tokyo open.
The immediate support is seen at the 21-HMA, now at $1880, below which
the upward-sloping 100-HMA at $1876 could be tested. Further south, the
critical 200-HMA at $1856 will be a tough nut to crack for the bears.
On the flip side, the Relative Strength Index (RSI) still holds above
the midline, keeping the bias for a rebound intact.
Acceptance above the 50-HMA barrier could expose the $1900 level. The
next resistance awaits at Monday’s high of $1907.
Analyzes provided by ( BINFXO BANK
) in collaboration with ( BE IN MARKETS )
and ( DR H M YOUNES )
0 Comments