GBP/USD consolidates near three-month tops amid mixed clues

• GBP/USD eases from 1.2730, the highest since March 12, 2020.
• Risk reset, US dollar pullback drags the quote from the multi-day top, UK news keep traders guessing.
• Brexit deadlock extends, UK’s coronavirus deaths drop to the lowest since lockdown began.
• Qualitative catalysts become the key amid a light calendar.

GBP/USD trims gains from the intraday top of 1.2730 to 1.2700, still up 0.26% on a day, while heading into the London open on Monday. Although the US dollar’s pullback from multi-day low seems to question the bulls, changes in the risk sentiment and fresh headlines from the UK add to the pair traders’ troubles.

The greenback recovers losses from March 12 low after Friday’s employment data flashed a surprise positive while receding protests in America also favored the US currency.

However, China’s Global Times (GT) seems to be the latest one that questions the previous risk-on momentum. The state-backed newspaper said that the Asian major is unlikely to lower tariffs on American lobsters as pushed for by US President Donald Trump during Friday’s roundtable event in the US northeastern state of Maine with local fishermen, as per the GT.

Also restricting the pair’s upside could be the fears of dwindling UK finances due to the government’s coronavirus (COVID-19) relief packages. This could be the reason for The Times news suggesting the UK PM Boris Johnson is considering imposing tough laws to prevent foreign takeovers that pose risks to national security amid growing concern about the influence of China, per Reuters.

Additionally, Brexit headlines are also playing a negative role as the European Union (EU) and the UK failed to offer any trade deal at the end of the fourth round. “The bloc’s chief negotiator Michel Barnier had been expected to present a compromise proposal on access to British waters during the talks last week but was blocked at the last minute by member states with large fishing communities,” said The Guardian.

Even so, news that the UK’s pandemic-related death has dropped to the lowest since lockdown stated, with an increase of 77 to 40,542, enables the Tory government to go ahead with their last unlock plans, which gains criticism off-late.

Amid all these mixed plays, the US 10-year Treasury yields pause the last week’s run-up around 0.90% whereas stocks in Asia flash mild gains.

Given the lack of major data/events from either the UK and or the US, markets may keep eyes on the qualitative catalysts like the COVID-19, Brexit and the UK politics for fresh impetus concerning the pair.

Technical analysis

Bulls need a sustained break above 61.8% Fibonacci retracement of December 2019 to March 2020, at 1.2710 now, to aim for a downward sloping trend line from December 12, 2019, currently around 1.2885. Meanwhile, a daily closing below 200-day SMA level of 1.2680 might drag the quote towards the April month top of 1.2648.