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GBP/USD keeps it below 1.3000 amid UK politics, Brexit and coronavirus

  • GBP/USD justifies Wednesday’s bearish Doji while snapping the earlier rise.
  • UK PM Boris Johnson’s cabinet reshuffle is likely to be less severe than previously anticipated, EU accused of “cherry-picking”.
  • Coronavirus risk renewed following a surge in the cases based on the new method.

GBP/USD nears the intra-day low of 1.2948 while making rounds to 1.2951 during the pre-London open session on Thursday. While pessimism surrounding Brexit and UK’s political drama have recently weighed on the quote, fresh risk of coronavirus seems to be the latest one to drag the pair to the south.

Not only the European Parliament’s resolution to push the UK towards the EU laws but the UK policymakers' accusations on Brussels also signal a tough start to the Brexit talks during the early March.

At home, the UK PM Johnson is set to announce his new cabinet and is mostly expected to refrain from drastic changes that previously cited by his key adviser, Dominic Cummings. “Johnson will summon sacked ministers to his House of Commons office in the morning to deliver the bad news before returning to Downing Street to welcome the parade of those who are being promoted,” said The Guardian.

Over the counter, the US dollar regained amid fresh risk aversion wave after coronavirus fears came back in focus. Although the early-Asian spike in numbers from Hubei was cited as the result of a new method, news of more cities lockdown and conferences canceled, not to forget increased cases from South Korea, Japan and the US, keep the risk-tone under pressure.

That said, the US 10-year treasury yields decline nearly three basis points to 1.60% whereas most of the Asian shares are also in negative territories.

Moving on, Brexit/political updates from the UK and the US Consumer Price Index data for January will be the keys to follow while also not forgetting about coronavirus.

Technical Analysis

Following a bearish candlestick formation, the quote could revisit a 100-day SMA level of 1.2920 ahead of the weekly low, also the monthly, near 1.2870 whereas further declines seem doubtful. On the upside, a clear break of 1.3000 could negate the candlestick pattern but need to cross 21-day SMA level of 1.3025 prior to aiming February 05 high near 1.3070.

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