Slowdown to 1.4150 as Brexit, reflation woes fight UK to unlock optimism
- GBP / USD extends Friday’s bearish momentum, refreshes intraday low.
- France warns UK about NI deal, British planes tour in Indo-Pacific could worsen fight with China.
- British diplomats appear confident about the June 21 deadline amid optimal vaccine performance on India’s variant of covid.
- Reflation, Fedspeak should be watched closely in a light timeline and the recent strength of the US dollar.
GBP / USD drops for the second day in a row, around an intraday low of 1.4137, midway through Monday’s Asian session. In doing so, the cable pair struggles to justify diminishing fears and optimistic sentiment about the UK’s easing of restrictions on virus-related activities, not to mention Brexit issues.
The Sun sees Dr Jenny Harries, head of testing and tracing at the National Health Service (NHS), as well as UK Minister of Health Matt Hancock to say: “England’s lockdown could end on June 21, according to experts after tests proved that the British vaccines are effective the Indian Covid variant. The news also marks the success of the Pfizer and AstraZeneca vaccines in taming the Indian strain of the coronavirus (COVID-19) to echo their optimism.
Elsewhere, Reuters quotes French Foreign Minister Jean-Yves Le Drian, speaking on the RTL ration, as saying: “France does not rule out” slightly more severe “health measures for travelers from Grande -Brittany.” It is worth mentioning that the French Minister for European Affairs, Clément Beaune, also warned “Britain not to play games with special post-Brexit trade rules for Northern Ireland, amid fears of ‘a summer of violence in the province is mounting,’ according to AFP. Brexit fears could also be the challenges of the UK-Norway trade deal.
Amid Brexit and covid games, the Confederation of British Industry (CBI) said: ‘Business and government should put the bitter divisions of Brexit behind them and focus on building a fairer economy and greener. ”
In addition, the GBP / USD price weighing could be the latest reflation fears, emanating mainly from the United States, as well as the seven-month trip of the British carrier strike group, carrying the force of nine ships, 32 planes and 3,700 members of staff, towards the Indo-Pacific region.
Amid those games, the S&P 500 Futures reverses early Asian losses as US Treasury yields and the US Dollar Index (DXY) consolidate Friday’s gains.
Moving on, UK Home Secretary Priti Patel’s plan for the UK ‘digital frontier’ could keep GBP / USD traders entertained, but major focus will be on reflation, Brexit and headline news in a light schedule.
Although a downside breakout of a seven-day-old support line near 1.4160 at press time, GBP / USD sellers hold hope, a 10-day SMA level of 1.4126 is probing short-term declines.