GBP/USD holds steady below 1.3450 amid Brexit, Omicron optimism
GBP/USD is consolidating below the five-week highs of 1.3446 amid easing Omicron and Brexit risks. The UK government offered assurance of no fresh restrictions during the holiday season. New post-Brexit rules over fisheries underpin the pound amid light trading.
Technical Overview
The cable pair refreshed the five-week top the previous day before easing from 1.3448. In doing so, the quote portrayed Evening Doji star bearish candlestick formation while also forming the rising wedge pattern near the multi-day top. Considering the bearish MACD signals favoring the downbeat hints from candlestick and chart pattern, GBP/USD is likely to witness further downside.
However, a clear break of 1.3415 will be clear for the quote’s theoretical south-run targeting the yearly low near 1.3170. During the fall, the 200-SMA level around 1.3325 can act as a buffer.
Fundamental Overview
| GMT | Event | Vol. | Actual | Consensus | Previous |
|---|---|---|---|---|---|
| MONDAY, DEC 27 | |||||
| 23:50 | JPY Industrial Production (MoM) | 7.2% | 4.8% | 1.8% | |
| 23:50 | JPY Industrial Production (YoY) | 5.4% | -5.0% | -4.1% | |
| TUESDAY, DEC 28 | |||||
| 08:00 | EUR Retail Sales (YoY) | 4.9% | -1.0% | -0.7% | |
| n/a | EUR Individual Investment (Current Year) | 10% | |||
| 13:55 | USD Redbook Index (YoY) | 16.4% | |||
| 14:00 | USD S&P/Case-Shiller Home Price Indices (YoY) | 18.5% | 19.1% | ||
| 14:00 | USD Housing Price Index (MoM) | 1.2% | 0.9% | ||
| 15:00 | USD Richmond Fed Manufacturing Index | 11 | |||
| 16:30 | USD 52-Week Bill Auction | 0.24% | |||
| 18:00 | USD 5-Year Note Auction | 1.319% |
Britain announced a £75million aid package to improve ports and processing facilities, as well as create jobs. The same relief measure joins the latest fishing rules stating the need for 70% British crew and 70% of fish that must be landed in UK ports.
It’s worth noting that studies from South Africa and the UK showing fewer odds of hospitalization due to the Omicron covid variant eased market fears from the South African covid variant. Also on the positive side were comments from US Vice President Kamala Harris who signaled to use her tie-breaking vote to pass President Joe Biden’s Build Back Better (BBB) stimulus plan. Further, ongoing talks over Iran’s denuclearization and a global push for peace between Russia and Ukraine also seem to have favored the GBP/USD buyers. Additionally, news that the US Centers for Disease Control and Prevention (CDC) reduced the isolation and quarantine period for the general population added to the bullish bias for the pair.
Against this backdrop, US equities closed higher while the US 10-year Treasury yields eased from the two-week high, dropping 1.7 basis points (bps) to 1.47%.
Looking forward, US housing and Richmond Fed Manufacturing data can offer intermediate relief to the cable pair but major attention will be given to Brexit and Omicron headlines.
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