GBP/USD clings to modest losses below 1.2300, UK CPI in focus
- GBP/USD stays depressed near a two-week low.
- Experts question the UK’s social distancing guidelines, death toll cross 17,000.
- Human trials of the vaccine begin on Thursday amid criticism of lack of medical supplies.
- UK CPI, Brexit and coronavirus updates will be crucial to follow.
GBP/USD registers three-day losing streak, down 0.07% on a day to 1.2285, while heading into the London open on Wednesday. Although coronavirus carnage and the broad US dollar strength keep the Cable under pressure, traders are waiting for March month inflation data for fresh impulse.
Amid increasing criticism of the Tory government’s handling of the coronavirus (COVID-19) crisis, the Health Secretary Matt Hancock said, as per the BBC, that the government is "throwing everything" at developing a coronavirus vaccine. The UK diplomat also mentioned the start of the human trials for the pandemic vaccine as well as updated self-isolation guidelines.
Even so, a group of 25 doctors in the UK are dissatisfied with the 7-day social-distancing rule against the World Health Organization’s (WHO) 14-day period and wrote the same to the Health Secretary Hancock. It should be noted that the UK’s death toll cross 17,366, per Bloomberg, on Tuesday while the Reuters suggest total cases above 129,000.
Elsewhere, the SkyNews states that the ex-deputy PM David Lidington calls for Brexit transition period extension. Though, Boris Johnson and the company is famous for its stand on the Brexit deadline and is likely to stick during the negotiations with the European Union (EU).
On the contrary, the US President Donald Trump mentioned that there are as many as 20 states ready for re-open while also staying ready to sign the bill that stops immigration into the US for 60 days. Also affecting the broad risk-tone sentiment were the early Asian news surrounding US Senate’s passage of $484 billion COVID-19 relief package and BOJ’s likely downgrade of economic and price forecasts. Furthermore, comments from the BOE's Bailey were also important to note during early Asian session.
That said, the US 10-year Treasury yields drop two basis points (bps) to 0.55%, after slipping four bps on Tuesday, whereas most stocks in Asia-Pacific mark losses by the pres time.
The pair traders are now likely to wait for the actual price impact of the pandemic of the Consumer Price Index (CPI) data for March, expected 1.5% YoY versus 1.7% prior. “We're a bit below consensus for today's March inflation data, looking for core CPI to slip to 1.5% y/y (market forecast 1.6%), and headline to 1.4% (expected 1.5%). These forecasts are also below the BoE's estimates from the January MPR, but will likely be largely ignored by markets, which are much more focused on activity data rather than inflation prints at the moment,” said analysts at the TD Securities.
Technical analysis
Unless bouncing back beyond a 21-day SMA level of 1.2375, buyers are less likely to aim for another run-up to 1.2655 comprising 200-day SMA, which in turn keeps sellers directed towards the monthly low near 1.2165 during the further downside.