GBP/USD: Shrugs off Brexit deal passage above 1.3600 amid covid woes, DXY bounce

GBP/USD fades early-Asian upside momentum while taking rounds to 1.3615/20 ahead of Thursday‘s London open. The cable jumped to the fresh 32-month top of 1.3649 before recently declining to the intraday low of 1.3604. Although the passage of the Brexit trade deal in the UK’s House of Lords favored sterling‘s initial run-up, the US dollar’s retreat from the multi-month low seems to have triggered the latest pullback moves.

UK‘s Parliament matched wide expectations of approved the hardly fought Brexit trade agreement with the European Union (EU). Doubts surrounding the future of British services post-Brexit join Scottish National Party’s (SNP) indirect threat to call for independence seems to have weighed on the Brexit deal passage optimism.

Also on the negative side is the news that the second shot of the coronavirus (COVID-19) vaccine will be delayed in the UK by around 12-weeks due to the governments priority to give first doses first exert downside pressure on the sterling. Furthermore, the jump in the virus cases, coupled with the recent cases covid strain outside the UK, also challenge the risks and offer indirect support to the US dollar.

The US decision to levy extra tariffs on certain products from Germany and France join the absence of $2,000 paycheck announcements from the American Congress to sour the mood. Additionally, UK PM Boris Johnsons warning to stay cautious during the year-end celebrations amid the jump in the covid cases, together with a hint to the third national lockdown, teases the GBP/USD bears.

Amid these plays, the US Dollar index (DXY) bounces off April 2018 low, marked earlier in Asia, while S&P 500 Futures wobble around $3,725/20 and stocks in Asia trade mixed.

Looking forward, a lack of major data/events will keep GBP/USD traders directed towards the virus and stimulus headlines for fresh impulse. Traders can also observe the US weekly initial jobless claims for intermediate moves.

Sustained trading below the early-month high near 1.3625/20 can keep directing GBP/USD sellers toward the 1.3600 round-figure, a break of which can retest the 21-day SMA level of 1.3450. Meanwhile, March 2018 low around 1.3710 may lure the Cable buyers during the fresh upside beyond the latest top near 1.3649.