GBP/USD pokes seven-week top near 1.3500 as Brexit, coronavirus battle soft yields
- GBP/USD grinds higher at multi-day top, bulls taking a breather after two-day uptrend.
- UK’s Sefcovic said, “London has breached great deal of trust.”
- Britain aims for ‘surge hubs’ as virus cases refresh record top.
- New Year’s Eve, light calendar to restrict market performance during the last of 2021.
GBP/USD takes rounds to 1.3500 during Friday’s Asian session, after refreshing the 10-week high the previous day. In doing so, the cable buyers pause following two consecutive days of run-up amid lackluster markets and no major catalysts, not to forget the year-end liquidity crunch.
Although the UK continues to suffer from the South African covid variant, namely Omicron, the government’s active response and medical studies taming fears of the virus strain keep GBP/USD buyers hopeful. Also helping the bulls could be the US dollar’s struggle, or preparations for the Fed rate hike in 2022, after a stellar 2021.
That said, Britain’s National Health Services (NHS) unveiled plans for “surge hubs” on Thursday. The so-called temporary medical housing facility became needed after the UK reported 189,213 cases.
The UK isn’t the only one suffering from the virus and has to control some of the year-end celebrations, the US and Europe are also in the line. That said, global policymakers advise people to stay cautious while cheering for 2022. Among them was World Health Organization Director-General Tedros Adhanom Ghebreyesus who urged people, per Reuters, “It's better to cancel now and celebrate later, than to celebrate now and grieve later.”
On a different page, European Commission vice-president Maros Sefcovic conveyed his dislike, for the UK’s Article 16 threats, via German news website Der Spiegel. Even so, the policymaker was sounding cautiously optimistic over finding a Brexit solution. It should be noted that the post-Brexit border checks take effect from January and increase the pessimism on the matter, which in turn should have the GBP/USD prices.
Elsewhere, the US policymakers remain hopeful of reaching an agreement over the Build Back Better (BBB) plan while also trying to placate fears over the Omicron. Talking about data, the US Initial Jobless Claims eased to 198K versus 208K expected during the week ended on December 24. Further, Chicago Purchasing Managers’ Index rose past 62.0 forecast to 63.1 for December.
It’s worth noting that the Wall Street benchmarks posted mild losses whereas the US 10-year Treasury yields consolidated the heaviest daily jump in three weeks, posted the previous day. That said, the S&P 500 Futures remain lackluster around 4,775 at the latest.
Moving on, GBP/USD prices are likely to remain sidelined amid a lack of major data/events and the year-end thin liquidity conditions.
Technical analysis
50% Fibonacci retracement of October-November downside, around 1.3500, restricts immediate moves of the GBP/USD pair. However, a clear upside break of the 50-DMA, at 1.3420 by the press time, keeps buyers hopeful.
Reprinted from FXStreet_id,the copyright all reserved by the original author.
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