GBP/USD: US dollar pullback, UK’s pandemic fears snap four-day winning streak
- GBP/USD steps back from the weekly top.
- UK’s death toll drops to the lowest since March 28 but fears of resurgence raise bars for easing lockdown restrictions.
- Allegations over the Tory government’s mishandling of coronavirus keep flooding, UK PM Johnson back in the driver’s seat.
- US dollar regains the bid amid increasing expectations of the world’s largest economy’s re-open.
GBP/USD takes a U-turn from the weekly top, down 0.13% on a day to 1.2415, while heading into the London open on Tuesday. While the USD’s return on the bulls’ radar can be considered as a primary reason for the pullback, fears of the UK’s coronavirus (COVID-19) resurgence also weigh on the pair.
While the return of the UK’s Prime Minister Boris Johnson to the office seems to have helped the Cable to print three-day winning streak on Monday, the Tory leaders struck a cautious statement concerning the pandemic fears and the readiness to ease the lockdown despite welcome numbers.
As per the BBC, the latest virus figures from the UK show a further 360 people died with the virus in hospitals, taking the total number of deaths to 21,092. That said, the death toll dropped to the lowest in a month.
Not only a risk of resurgence but the criticism of the Tory government’s handling of the pandemic, due to the lack of promised tests and shortage of medical supplies, also contribute to making the UK PM cautious head of lifting the lockdown restrictions.
Other than being cautious over lifting the stay-at-home orders, the Tory government’s push for further tests to achieve 100,000 a day target and calling for public questions to be discussed in the daily briefings also portray the UK PM Johnson and party’s concern for the nation. It should also be noted the chancellor’s efforts to keep small businesses happy are also appreciable despite recent criticism over the cracks in the mechanism.
On the other hand, the US dollar might have regained the bids as US President Donald Trump keeps the hope of returning to the full markets.
Market’s risk-tone remains mostly sluggish with the US 10-year Treasury yield taking rounds to 0.65% and mixed performances of the Asian stocks.
Looking forward, the virus updates remain as the key catalyst while the US data concerning the Consumer Confidence and Richmond Fed Manufacturing could offer intermediate moves.
Technical analysis
A seven-week-old falling trend line restricts immediate upside around 1.2440 whereas 21-day SMA near 1.2405 keeps the Cable in a tight range with more odds favoring to refresh the monthly top near 1.2650.