GBP/USD: Mildly negative below 1.3000 with eyes on qualitative risk catalysts
- GBP/USD keeps the losses for the second day in a raw.
- The EU-UK tussle over fisheries, criticism of the British PM join broad US dollar strength.
- Political headlines from the UK, coronavirus updates and the US data will be in focus.
GBP/USD keeps it rolling below 1.3000, currently -0.06% to 1.2985, while heading into the London open on Thursday. Political pessimism surrounding the UK, Brexit as well as the market’s rush towards the greenback keeps the cable under pressure.
The French Fishermen send threats to their UK counterparts after British Prime Minister Boris Johnson blocked the deal at the London Fisheries Convention during the early weekdays. This adds to the EU-UK spat where the region isn’t ready to accept Britain having an upper hand.
At home, the Tory government is rushing to implement emergency laws restricting terrorists' release from jail in haste whereas the UK culture secretary Nicky Morgan has called for a resolution of a spat between the British political journalists and UK PM’s communications chief. Further, news also crossed wires, via the National Institute of Economic and Social Research (NIESR), that there is only about 20% probability of the UK economic growth doubling its pace of expansion, in the face of the country’s chronic run of poor productivity.
The pair had to ignore better than forecast UK Services PMI as comparatively strong US data, like ISM Non-Manufacturing PMI and ADP Employment Change, kept the US dollar on buyers’ list.
Market’s risk-tone remains upbeat despite increasing coronavirus cases as equities cheer China’s liquidity infusion and upbeat data from the global powerhouses. As a result, the US 10-year treasury yields and Asian stocks register mild gains for the third consecutive day.
Looking forward, the UK economic calendar is mostly empty whereas the otherwise is true in the case of the US data that offers quarterly figures of Nonfarm Productivity and Unit Labor Costs. Also increasing the line are US Jobless Claims and comments from the Federal Reserve Bank of Dallas President Robert Kaplan. Furthermore, updates concerning the coronavirus and UK politics will continue to be on the front row.
While most of the scheduled US employment data are likely to keep the pair’s sellers happy, expected weakness in the Unit Labor Costs to 1.3% from 2.5% may trigger the greenback’s fresh declines.
Technical Analysis
An area between 100-day EMA and 21-day EMA, 1.2925 and 1.3055 respectively, limits the pair’s near-term moves.