Market news
16.05.2022, 04:50

GBP/USD renews downside towards 1.2200 as Brexit woes join risk-off mood

  • GBP/USD reverses Friday’s corrective pullback from two-year low.
  • UK’s readiness to alter NI protocol, despite EU’s warning, keeps Brexit fears on the table.
  • China’s downbeat data, covid news refresh risk-aversion aversion wave.
  • Light calendar focuses on qualitative catalysts for fresh impulse, UK jobs report, US Retail Sales are crucial for the week.

GBP/USD holds lower ground near 1.2340 as Friday’s corrective pullback fades amid fresh challenges to sentiment during early Monday morning in Europe. Also weighing on the quote are the fears emanating from Brexit chatters, recently surrounding the Northern Ireland Protocol (NIP).

That said, Market sentiment sours after China reported downbeat figures for April month’s Retail Sales and Industrial Production, backed by conveying fresh fears over the coronavirus resurgence. Furthermore, fears that Germany isn’t going to respect Hungary’s push for no total ban on Russia’s energy imports, as well as news that the military actions in Donbas continue to accelerate, underpin the risk-off mood.

At home, UK PM Boris Johnson braces for altering the NIP with hopes of a change in the European Union’s (EU) position. The UK government is expected to reveal plans for unilateral changes in NIP on Tuesday. The bloc, however, previously warned of such actions with a cut in a trade deal with Britain.

On the other hand, the Financial Times (FT) conveyed optimism at the British manufacturers as they jostle to ease the supply chain concerns. “Three-quarters of companies have increased the number of their British suppliers in the past two years, according to a survey by Make UK, the manufacturers’ trade group,” said the news.

Against this backdrop, the S&P 500 Futures drop 0.80% even after the Wall Street benchmarks rallied the previous day. Further, the US 10-year Treasury yields struggle to extend Friday’s recovery moves as the bond coupon declines 2.5 basis points (bps) to around 2.90% by the press time.

To sum up, the risk-off mood and downbeat sentiment concerning Brexit exert downside pressure on the GBP/USD prices. However, a lack of major data/events during the day may allow the cable to pare the latest losses should the Western markets favor risk appetite. Hence, qualitative catalysts will be in focus ahead of Tuesday’s UK jobs report.

Technical analysis

A three-week-old falling wedge bullish chart pattern, between 1.2310 and 1.2100 of late, suggests that the GBP/USD bears have recently run out of steam.

 

© 2000-2024. All rights reserved.

This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

The information on this website is for informational purposes only and does not constitute any investment advice.

The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.

AML Website Summary

Risk Disclosure

Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.

Privacy Policy

Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.

Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.

Bank
transfers
Feedback
Live Chat E-mail
Up
Choose your language / location