The GBP/USD failed to extend its overnight gains and took modest offer around 1.2499 level while represented 0.15% losses on the day mainly due to the worries over the next week's critical Brexit talks. The optimism over the UK reopening has faded in the wake of intensifying coronavirus fears, which also exercised some downside force on the cable pair. On the other hand, the broad-based US dollar new recovery mode turned out to be one of the key factors that kept the currency pair under pressure. At the moment, the GBP/USD is trading at 1.2497 and consolidates in the range between the 1.2497 - 1.2542. However, the pair's traders are cautious about placing any strong position as they have a few factors to watch on the calendar, which in turn makes qualitative risk guides the key for near-term direction.
It is worth recalling that the market traders initially cheered the optimism over the easing of social distancing measures and opening bars, cinemas, etc. by the UK PM Boris Johnson. Afterward, the scientists instantly criticized the decision of PM Boris Johnson while fueled the fears of coronavirus. The death losses of people with coronavirus in the UK today crossed 54,000 and stood 54,089 so far. Besides, scientists have warned that while citing the Boris decision over easing social distancing measures, the risk catching Covid-19 is ten times higher at one meter away than two meters away.
At the Brexit front, the British policymakers' expectedly push for market access during the next round of Brexit talks. Let me remind; the UK government declared plans on Tuesday for post-Brexit financial regulation, which assured the Tory government that it would maintain the "highest" standards — challenging the EU to decide if it is sufficient to allow British groups to continue access to its markets.
The broad-based US dollar at the USD front erased its early-day losses and rose slightly mainly due to fresh uncertainty in the market backed by trade and virus worries. Whereas, the US 10-year Treasury yields remain positive, around 0.72% and stocks in Asia flash mixed signals. However, the fresh gains in the US dollar turned out to be one of the key factors that kept the currency pair under pressure. Looking forward, the trader will keep their eyes on the Brexit and pandemic updates for fresh impetus. Fedspeak and UK politics could offer additional directions for the pair.
Daily Support and Resistance
Pivot Point 1.2494
On the 4 hour timeframe, the GBP/USD has formed asymmetric Triangle Pattern, which is resisting the trading range between the 1.2520 - 1.2405 level. On the lower side, the GBP/USD prices are likely to drop below 1.2494 level today, while the initial target will be 1.2405. The Cable has already crossed below 50 periods EMA which is suggesting odds of selling bias in the market. The most recent bearish engulfing candle also suggests a selling trend. Therefore, we should look for selling trades below 1.2494 level today. Good luck!