- GBP/USD bears pause selling as Brexit deal hopes revive.
- Pandemic worries and dollar strength put a lid on cable recovery.
- Traders await BOE Bailey’s speech, US Jobless Claims and Powell’s testimony.
GBP/USD failed to sustain the recovery pullback above 1.2775 and has been continuing its consolidation overnight to European open – around 1.2700.
The pair, on Wednesday, initially fell to its lowest level since July 23 at 1.2674 after new restrictions were imposed by the Boris Johnson administration in the UK, to contain the spread of coronavirus pandemic. Market fears the derailing of economic recovery due to the limitations imposed on activities. Six thousand one hundred seventy-eight new infections were reported in the UK -the largest daily jump since May.
The pessimism got cut when the European Union Chief Brexit Michel Barnier expressed determination to strike a Brexit deal, and the GBP/USD regained some of its recent losses.
But the disappointment in the Preliminary Markit PMIs again pulled down the pair as the readings indicated a slower expansion in business activity in September. At the same time, the US dollar continued to climb on the support of risk-averse mood across the globe in equities and commodity-linked currencies.
The pound traders will watch the UK CBI Distributive Trades Survey on realized sale. Nevertheless, the focus will be on BOE Governor Andrew Bailey’s speech and US jobless claims along with the Fed chief’s testimony before the US congress.
On the technical chart, a Doji has formed after the move from 1.3483 to 1.2675 and near the 200-day SMA support line. The formation might indicate seller exhaustion. But, a bullish reversal could be triggered if GBP/USD closes above Doji candle’s high of 1.2777. A fall below its low of 1.2675 would signal the continuation of the current sell-off.
