GBP/USD: Depressed below 1.3800 as coronavirus woes probe UK unlock plans
- GBP/USD remains heavy around near the weekly low.
- Multi-month high covid infections challenges July 19 deadline of remove UK’s all activity restrictions.
- British PM Johnson warns EU over NI protocol, exodus of Jewish people also feared.
- Covid woes back safe-haven dollar, US Jobless Claims eyed.
GBP/USD licks its wounds around 1.3785, off intraday low of 1.3774 but down 0.12% on a day, heading into Thursday’s London open. The cable tracks other major currencies while portraying the US dollar strength, as the coronavirus (COVID-19)-led risk-off mood put a safe-haven bid under the US dollar.
Although the UK’s covid death toll eased recently, the virus infections have jumped to the highest in six months on Wednesday, above 32,000 level. The same probes the UK PM Johnson’s unlock plans and pushes the World Health Organization (WHO) official Mike Ryan to warn, per The Guardian, of ‘epidemiological stupidity’ of early covid reopening.
Elsewhere, Atlanta Federal Reserve President Raphael Bostic said, per Reuters, “A new rise in coronavirus infections driven by the more virulent Delta variant could cause consumers to "pull back" and slow the US recovery.” It’s worth noting, unfortunately, that figures compiled by Johns Hopkins University suggest the virus-led daily death figures fell over the last month to around 8,000 around the world. Even so, the total death toll passes four million.
Other than the pandemic fears, the Brexit woes also weigh on the GBP/USD prices as UK PM Boris Johnson warns over exodus of the Jewish people from Northern Ireland (NI), per The Independent, as a consequence of the protocol he agreed as part of his Brexit deal. British Leader Johnson also pushed the bloc to ‘repair’ the NI protocol for progress over the talks.
Amid these plays, S&P 500 Futures drop 0.20%, easing from record top, whereas the US 10-year Treasury yields seesaw around the lowest since February.
Given the lack of major data/events, except for weekly Jobless Claims, GBP/USD traders should pay attention to the virus updates and Brexit headlines for fresh impulse. It should be noted that any further strength of the US job numbers could keep the USD strong amid hopes of the Fed’s rate hike, even as the latest FOMC minutes rejected any such actions.
Technical analysis
GBP/USD bears reject the previous day’s Doji candlestick formation. Hence, odds of the pair’s drop to the latest trough surrounding 1.3730 ahead of highlighting the support line of the short-term wedge, close to the 1.3700 round figure, can’t be ruled out. On the contrary, a two-week-old falling trend line near 1.3830 guards the quote’s immediate upside ahead of the weekly top surrounding 1.3900.