Market news

20 December 2021

GBP/USD reclaims the 1.3200 figure as US T-bond falls despite UK’s coronavirus outbreak

  • The GBP/USD is trading at 1.3225 at the time of writing.
  • Brexit UK’s top negotiator David Frost resign unexpectedly on Saturday in the middle of negotiations.
  • Political domestic issues in the US propel some USD weakness, as Democrat Senator Munching back-off supporting US President Biden’s agenda.
  • GBP/USD Technical Outlook: Neutral-bearish, but a gravestone-doji in the daily chart, could propel the pound towards 1.3400.

The  British pound recovers from earlier losses reclaim 1.3200 amid global concerns on the Omicron variant, and surprising resignations over negotiations with the EU, as British negotiator David Frost unexpectedly stepped down, blaming the direction of PM Boris Johnson party. Further, per the political editor at the Sun, UK Boris Johnson is not preparing to announce further Covid-19 this Monday, despite that the UK reported 82,886 new coronavirus cases.

Additionally, USD weakness prevails on the back of lower US T-bond yields, amid domestic political issues,  with Democrat Senator Joe Manchin rejecting the US President Biden Build Back Better program. According to Bloomberg, the White House called the senator’s decision “sudden and inexplicable reversal.” As year-end looms, negotiations would re-start at the beginning of the following year, before the midterm elections.

In the meantime, as Wall Street opens, the US 10-year T-bond benchmark note drops one and a half basis points, sitting at 1.388%, undermining the US Dollar Index, which measures the greenback’s value against its peers, losing 0.18%, down to 96.39 at the time of writing.

The UK economic docket featured the Rightmove House Price Index for December in the European session. On a monthly basis shrank to 0.7%, more than 0.6% on the previous read, while the yearly basis stood at 6.3%, unchanged.

GBP/USD Price Forecast: Technical outlook

After dipping to 1.3174, cable trimmed some overnight losses, reclaiming the 1.3200 figure despite the coronavirus outbreak in the UK, as US Senator Manchin rejected President Biden’s agenda. That said, at press time, the GBP/USD daily chart depicts a gravestone doji, a bullish signal, that could propel the prospects of Sterling. However, a daily break above 1.3289 resistance is needed to challenge the 1.3400 figure before the year’s end.

If GBP bulls reclaim 1.3289, the next resistance would be December’s 17 daily high at 1.3339. A clear break of that level could witness a jump towards December’s 16 daily pivot high at 1.3374, followed by 1.3400.

 

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