GBP/USD bears attack 1.3750 on covid, Brexit woes ahead of US data, Jackson Hole
- GBP/USD remains offered for the day, snaps three-day uptrend.
- British supermarkets warn of food shortages over Christmas due to Brexit, virus.
- Fears over September unknown for covid, fresh fishing war strengthen bearish impulse.
- DXY cheers risk-off mood, ignores depressed Treasury yields before US Core PCE Inflation, GDP and Powell’s showdown at Jackson Hole.
GBP/USD stands on the slippery ground after a three-day run-up, down 0.10% at the intraday low of 1.3750 heading into Thursday’s London open. The cable tracks the major currency pairs while portraying the US dollar’s safe-haven demand amid the virus jitters and the pre-data/event caution, not to forget the Brexit woes.
With the Latitude festival linked to over 1,000 cases, fueling the total daily virus count to 30,838, not to forget record infections in the key Pacific nations, fears of the COVID-19 are back to haunt the previous optimism. On this line, the Guardian quotes British research stating, “Covid booster shots may only be needed for about 40% of immunosuppressed people.” The news also added that the latest (UK’s covid) figures came amid a warning in Scotland about a sharp rise in new infections.”
On a different page, The Independent quotes the UK’s head of the Co-op supermarket as saying, “Britain’s post-Brexit supply chain crisis could ‘cancel Christmas’ and continue to cause food shortages well into 2022.” The UK Express adds to the Brexit fears while stating that The European Parliament made a "peculiar and unprecedented" demand in regards to fishing in UK waters after Brexit, unearthed reports claim.
Elsewhere, headlines suggesting Sino–American dialogue for peace over equity trading and chatters over Beijing’s lost economic momentum, conveyed by Bloomberg, were additional filters to the market sentiment and helped the US Dollar Index (DXY) to snap a four-day downtrend, up 0.08% on a day around 92.90 by the press time.
Above all, the market’s cautious ahead of the Jackson Hole Symposium, not to forget the US Personal Consumption Expenditure (PCE) Inflation data and second reading of the US Q2 GDP, become the key burden on the risk appetite. That said, downbeat US Durable Goods Orders for July and US Health Official Anthony Fauci’s expectations of getting the COVID-19 conditions under control by early 2022, backed by strong jabbing, favored the bulls the previous day.
Moving on, US GDP and Core PCE Inflation will be closely watched to forecast Fed Chair Powell’s Jackson Hole showdown, up for Friday.
Technical analysis
Unless declining back below the double bottoms surrounding 1.3670, GBP/USD stays directed towards the 1.3785–3800 resistance zone comprising multiple levels marked since late June, 200-DMA and monthly falling trend line.