GBP/USD pares daily losses around 1.3600 despite Brexit, geopolitical woes
- GBP/USD bounces off intraday low, pokes upper end of the short-term trading range.
- EU’s Sefcovic pours cold water on hopes of Brexit breakthrough, UK Treasury plans post Brexit overhaul of insurance industry.
- UK, US braces for fresh sanctions on Russia as it moves troops closer to Donetsk and Luhansk.
- UK PMIs propelled bets of BOE rate hike in March, US PMIs for February eyed amid recently easy Fedspeak.
GBP/USD picks up bids to consolidate intraday losses around 1.3600 as cable traders await Tuesday’s London open.
The pair began the week on a positive side as firmer UK PMIs favored hawks at the Bank of England (BOE). Though, the risk-aversion wave offered a positive week-start to the USD bulls and weighed on the quote during the early Asian session.
The preliminary readings of the UK’s February month Manufacturing and Services PMIs rose past market consensus during the latest readings. However, the UK Express quotes European Commission's Brexit point person Maroš Šefčovič while portraying the challenges for the GBP/USD and probed the bulls afterward. The news reads, “Maros Sefcovic has wrecked hopes of an EU breakthrough after high-stakes talks with Britain's chief Brexit negotiator, Liz Truss, in Brussels today (Monday).” Also concerning Brexit is The Guardian’s news saying, “The Treasury has announced plans to unlock more than £10bn of UK infrastructure investment through a post-Brexit overhaul of the insurance industry.”
On the other hand, the US Dollar Index (DXY) prints a four-day uptrend near 96.15 amid the market’s risk-off mood. Sentiment soured on escalating fears of an imminent Russian invasion of Ukraine, as previously warned by the West.
The United Nations (UN) recently called an emergency meeting wherein Secretary-General for Political Affairs, Rosemary A. DiCarlo, said that she regrets the order to deploy Russian troops into eastern Ukraine on a reported 'peacekeeping mission'. Adding to the market fears were Western leaders’ readiness to announce more sanctions for Russia.
Amid these plays, stock futures in the US and Europe remain downbeat whereas the US Treasury yields also dropped seven basis points (bps) to 1.85% at the latest.
Moving on, Brexit headlines will join geopolitics to direct short-term GBP/USD moves. Also important will be the first readings of the US Markit PMIs for February amid recently softer Fedspeak. On Monday, Federal Reserve Board Governor Michelle Bowman followed the tunes of Chicago Fed President Charles Evans and New York Federal Reserve Bank President John Williams while saying, “It is too soon to tell if the Fed should hike 25 or 50bps in March.”
Technical analysis
GBP/USD remains inside the 1.3645 and 1.3555 area since early February. However, bullish MACD conditions join firmer USD, amid risk-off mood, to keep buyers hopeful.