The GBP/USD currency pair hit the fresh 2020 high level above 1.3400 marks and remained supportive above the 1.34 level as the currency pair buyers get a warm welcome after returning from the long weekend. However, the bullish tone around the currency pair could be attributed to the U.S. dollar's weakness that dragged the dollar gauge to the lowest since May 2018. The U.S. dollar was pressed by the possibilities of continuous low U.S. rates. Also, supporting the currency pair could be the broadly optimistic markets, which kept the bulls active.
On the contrary, the Brexit woes and the virus concerns could stall the currency pair's on-going recovery moves. At this particular time, the GBP/USD currency pair is currently trading at 1.3404 and consolidating in the range between 1.3356 - 1.3419. Moving on, the currency pair traders seemed cautious to place any strong position ahead of U.K.'s Manufacturing PMI.
France recently warned the U.K. about ending the Brexit talks. This move came after British PM Boris Johnson blamed the E.U. push towards a no-deal departure. However, these headlines were overshadowed by the fresh news suggesting Tuesday's EU-UK emergency discussions in London, which kept the GBP buyers hopeful.
On the other hand, the U.S. dollar has refreshed the fresh low since May 2018 level on the day. However, the reason could be associated with the Federal Reserve's new policy framework, which fueled bets that rates in the U.S. will continue to remain low as compared to other countries. Thus, the losses in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index Futures that tracks the greenback against a bucket of other currencies dropped by 0.21% to 91.938 by 10:07 PM ET (3:07 AM GMT).
Also weighed on the greenback could be the upbeat market sentiment. The market trading sentiment was boosted by the upbeat China manufacturing PMIs, released this week, and intensified possibilities for faster recovery in the world's 2nd-largest economy. As well as, the decreasing coronavirus (COVID-19) cases in the U.S. and talks surrounding the coronavirus vaccine also exerted a positive impact on the market trading sentiment and contributed to the U.S. dollar losses.
On the negative side, the rising number of coronavirus in the U.K. could cap further gain in the currency pair. According to the latest report, the U.K. death losses rose by 2 to total 41,501, and cases crossed 335,873 figures on Monday. However, moderate optimism over the ingredient protecting against the coronavirus and 21-day immunity plan has been overshadowing the intensifying virus fears, which might support the currency pair.
Looking ahead, the market traders will keep their eyes on the 2nd reading of the U.K.'s manufacturing PMI, which is expected to confirm the initial 55.3 announcements. Whereas, the US ISM Manufacturing PMI can increase to 54.5 from 54.2 prior. In the meantime, the updates surrounding the emergency Brexit talks can surprise markets. As well as, the Sino-US tussle and the coronavirus (COVID-19) updates could not lose their importance.
Daily Support and Resistance
S1 1.3079 ,S2 1.3197, S3 1.3274
Pivot Point 1.3315
R1 1.3393, R2 1.3434, R3 1.3552
The GBP/USD prices continue trading sharply bullish, crossing over 1.3284 resistance level, which is now working as a support level for the Cable. On the higher side, the GBP/USD pair may continue trading bullish around 1.3505, which is working as a resistance for now. Bullish crossover of 1.3504 level can trigger buying until 1.3693 level. Conversely, bearish correction can lead the Cable towards 1.3284 level today. Good luck