During the Monday's Asian trading session, the GBP/USD currency pair stopped its early-day declines and took fresh bids around the 1.2320. On the other hand, the fresh hopes by UK PM Johnson to boost the infrastructure spending underpinned the cable and contributed to the currency pair gains. However, the traders seem cautious to place any strong position as post-Brexit trade deal negotiations between the U.K. and European Union (E.U.) are starting today, which will keep the cable's traders cautious.
The U.K. negotiating team based on 20 British diplomats managed by the Chief Brexit negotiator David Frost reached the E.U. on Sunday for the long-awaiting talks with the bloc leaders. Whereas, the UK PM Boris Johnson's latest visit to the local headquarters boosted the hopes of fastening of departure talks and a trade deal.
However, issues like fishing, E.U.'s judicial power post-Brexit, and the "level playing field turned out to be the key factors that kept the negotiators under pressure. During this time, the German Member of the European Parliament (MEP), Terry Reintke, said that the UK Tory government would have to show compromising tone to reach the Brexit deal. On the other hand, the senior Conservative Members of the Parliaments (M.P.s) urge U.K. officials to "say no" to Brexit compromise.
Apart from Brexit talks, the heightened concerns over a second economic lockdown in the U.K. due to the increased number of confirmed coronavirus cases urged Leicester for local lockdowns. As per the latest updates, the British Department of Health and Social Care showed an increase of 36 people who have died on Saturday afternoon, heading the total coronavirus-related death toll in the country to 43,550. Moreover, the total numbers of COVID-19 patients in the nation rose to 311,151, which kept the additional gains in the cable currency limited.
On the positive side, the latest report suggested that the UK PM Johnson will deliver an additional $1.23 billion to build the first 50 projects, including schools that exerted some positive impact on the GBP/USD currency pair and offered further directions to the cable prices.
The risk-off market sentiment was further bolstered by the announcement of China about imposing heavy lockdown restrictions in Anxin County, the same as Wuhan's restrictions during the early outbreak of the virus. In the meantime, Tokyo registered the highest figures of infected cases since the cancelation of the national emergency during late-May.
Despite this, the broad-based U.S. dollar hovering into the previous losses as the investor's sentiment swing between hopes for global economic recovery and fears that a fresh wave of coronavirus cases could undermine the recovery. However, the losses in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies fell 0.11% to 97.293 by 12:50 AM ET (5:50 AM GMT).
Looking forward, the Brexit updates will be the key to watch for the currency pair's traders. As well as, the market participants will also keep their eyes on the trade/virus updates due to the lack of major economic data to be published today. On the other hand, the U.S. housing data and regional Fed manufacturing indices will be closely observed.
Daily Support and Resistance
S1 1.2117
S2 1.224
S3 1.2288
Pivot Point 1.2363
R1 1.2411
R2 1.2485
R3 1.2608
The GBP/USD has violated the symmetric triangle pattern, which is likely to extend selling bias until it reaches 1.2245, and below this is the next target level of 1.2165 level. At the same time, the resistance stays at 1.2389 level, which is extended by an upward trendline, which previously worked as a support. The RSI and MACD are also in support of selling along with the 50 EMA. Let's consider selling below 1.2385 level today. Good luck!