GBP/USD: Keeps losses from yearly top below 1.3400, BOE’s Bailey eyed

• GBP/USD probes day’s low while snapping a three-day winning streak, justifies Tuesday’s pullback from December 2019 top.
• Emergency Brexit talks couldn’t change the EU-UK policymaker’s stubbornness, AstraZeneca heads for the final trials.
• Market sentiment stays positive despite Sino-American tension, US stimulus deadlock.
• BOE Governor Andrew Bailey to be a witness in front of the Treasury Committee, US ADP will also be the key.

GBP/USD remains heavy around 1.3380 while heading into the London open on Wednesday. The Cable printed the yearly high the previous day but the broad US dollar recovery snapped the run-up afterward. Also weighing on the quote could be the Brexit woes due to the differences between the British and European Union (EU) negotiators during the unscheduled information discussion of Tuesday. Moving on, the pair traders will keep eyes on the BOE Governor Andrew Bailey for fresh impulse while the US ADP Employment Change can also entertain the market players.

On Tuesday, Downing Street has said that it will be difficult to finalize a free trade agreement with the European Union before the no-deal deadline at the end of this year, said the UK Telegraph. Also suggesting the bumpy road ahead in the negotiations are the chatters that Tories push for no adjustments to the Fisheries Bill.

Elsewhere, UK-based pharmaceutical company AstraZeneca begins the final phase of the coronavirus (COVID-19) vaccine trials today. The news helped to keep the market sentiment positive even as the Trump administration’s salvo on China joins downbeat comments House Speak Nancy Pelosi, relating to the ‘serious differences’ over the stimulus package, question the market sentiment.

While portraying the mood, S&P 500 Futures gain 0.30% whereas shares from Asia-Pacific trade mixed. Further, the US 10-year Treasury yields added 1.4 basis points to 0.685% by the press time. It’s worth mentioning that the US dollar extends pullback from a 28-month low to 92.40, up 0.08%, as we write.

Considering the recent pullback of GBP/USD prices, traders will closely follow the US dollar moves ahead of the BOE Governor’s speech. While the ADP is likely to favor further strength of the greenback with 950K forecast versus 167K prior, expectations are too high and a disappointment will be enough to drag the US currency back to the multi-month low.

On the other hand, BOE’s Bailey will be the witness of oral evidence concerning the “Economic impact of coronavirus.” Hence, his comments will be the key. The BOE Chief struck a downbeat tone while defending the Quantitative Easing (QE) during his last week’s speech at the Jackson Hole.

Technical analysis

Bulls are waiting for a clear break above the ascending trend line from June, at 1.3405 now, to attack the previous yearly top near 1.3515. Meanwhile, a downside break of the August 19 top surrounding 1.3270 can recall the short-term sellers.