- GBP/USD remains pressured on a day, pares the first weekly gains in five.
- French MP threatens UK over fishing row, EU braces for new NI protocol proposals.
- US Senate passes $ 408 billion debt filibuster until December.
- China’s return fails to improve sentiment amid pre-NFP anxiety.
GBP/USD refreshes intraday low surrounding 1.3600, down 0.14% on a day heading into Friday’s London open.
In addition to the fresh Brexit updates and the pre-Fed market anxiety, risk-off catalysts from China could also be linked to the cable pair’s latest weakness.
Talking about Brexit, the UK-France tussles over the fishing rights take a new turn after the French MP Jean-Pierre Pont said, per the Daily Mail, that the French government should consider scrapping the Touquet Treaty which allows the UK to set up border checkpoints on French soil. Elsewhere, European Commission Vice President Maros Šefčovič showed readiness for “Very far-reaching" proposals over Northern Ireland (NI) protocol edit, per the BBC. However, the UK policymakers need drastic changes and hence the deadlock is less likely to be overcome soon.
On a different page, China’s Fantasia becomes another real estate player whose bonds are banned after Evergrande and weighed on the risk appetite, helping the US dollar. Further, early signals for the US Nonfarm Payrolls (NFP), up for publishing today, add to the Fed tapering woes and underpin the US Treasury yields, indirectly favoring USD bulls. Forecasts suggest, the headline Nonfarm Payrolls (NFP) to rise by 488K versus 235K prior whereas the Unemployment Rate may ease to 5.1% versus 5.2% previous readouts.
Earlier in the day, the US Congress passes the bill favoring the debt ceiling extension by $408 billion until early December 2021, which in turn favored risk-on mood. On the same line were positive headlines concerning the Sino-American relations and the People’s Bank of China’s (PBOC) readiness to keep the financial markets liquid.
It should be noted that the Bank of England (BOE) policymakers keep their cautious optimism, per the latest comments published the previous day, which in turn helped the GBP/USD prices to remain firm on Thursday amid a brighter mood.
Looking forward, the US jobs report becomes the key data for the GBP/USD traders to watch amid Fed tapering woes.
Read: US Nonfarm Payrolls September Preview: How far will markets go when the Fed tapers?
Technical analysis
GBP/USD cheers a sustained break of the 10-DMA and previous resistance line from September 14, respectively around 1.3570 and 1.3555. However, 38.2% Fibonacci retracement (Fibo.) of July-September fall guards immediate upside near 1.3630.
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