GBP/USD refreshes intraday low to 1.3233 during the early Asian session on Monday. Recently elevated concerns over the coronavirus spread in the UK and Brexit updates could be held responsible for the cable pair traders’ disappointments despite the Bank of England’s (BOE) rate hike.
With a 52% weekly jump in the UK’s coronavirus cases, Prime Minister (PM) Boris Johnson seems to have activity restrictions during the Christmas celebrations. “The United Kingdom reported 82,886 new COVID-19 cases on Sunday and 45 deaths within 28 days of a positive test, government statistics showed,” said Reuters. On the other hand, “Prime Minister risks fresh row with the Cabinet as he considers 'light touch' plan to help curb the spread of Omicron Covid variant,” per the UK Telegraph. However, UK Chancellor Rishi Sunak is said to resist new virus-led activity restrictions before Christmas, as signaled by The Times.
Elsewhere, UK’s Brexit Minister Lord Frost resigned after conveying, “We have not made enough progress on NIP,” at the latest. Trade Minister Lizz Truss will be heading Brexit negotiations from now onward and is pressured to make Northern Ireland (NI) protocol work. As per The Independent, “Lord Frost’s replacement as Brexit minister will “need to find solutions” to make the Northern Ireland Protocol work, Stormont’s Deputy First Minister Michelle O’Neill has said.”
It’s worth noting that the Bank of England’s (BOE) rate hike portrayed inflation pressure and the fundamental strength of the UK’s economy. However, the fresh chatters over the Fed’s rate hike, recently renewed by Fed Board of Governors member Christopher Waller, gain major attention and weigh on the GBP/USD prices.
Additionally, disappointment over the US Build Back Better (BBB) stimulus plan also exert downside pressure on the GBP/USD prices, by way of the US dollar’s safe-haven demand. Recently, US Senator Joe Manchin rejected the Democratic push to back President Joe Biden’s aid package and raise concerns of no stimulus passage during the rest of 2021.
Amid these plays, US Treasury yields and the Wall Street benchmarks printed losses but the S&P 500 Futures rise 0.16% intraday by the press time.
Looking forward, an absence of major data/events keeps GBP/USD traders pushed towards risk catalysts for fresh impulse.
Failures to rise past the early November lows near 1.3350 direct GBP/USD prices towards a six-week-old previous resistance line near 1.3145. During the fall, the yearly low of 1.3160 can offer an intermediate halt.
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