- The cable continues to retreat from Monday’s highs below 1.3450 and is now trading below 1.3350.
- News that London will return to the level 3 lockdown amid an outbreak of a new, more virulent Covid-19 strain hit the British pound.
- But the British pound remains backed Monday by hopes of a Brexit breakthrough as talks progress.
He GBP/USD it almost managed to rise to 1.3450 on Monday morning of the European session, but recently the trade fell back and is now trading below the 1.3350 level again amid a broad recovery of the US dollar from lows. The recent pullback was largely triggered by news that a new variant of Covid-19 is spreading in London and as a result, the city was confirmed to return to Level 3 lockdown. But the pair is still trading over 100. pips or about 0.8% above their closing levels last Friday below 1.3250, fueled by hopes of a Brexit advance as talks progress.
London blockade, new variant of Covid-19
As rumored over the weekend and into European morning, London, the UK capital that accounts for more than 20% of national GDP, will return to the UK’s highest level of Covid-19 restrictions at midnight on Wednesday. UK Health Secretary Matt Hancock confirmed the rumors in the UK House of Commons a few moments ago, but the GBP was not overly reactive.
However, GBP / USD experienced some negative ticks when Hancock announced that scientists in the UK have identified a new strain of Covid-19 that spreads “much faster”, with more than 1000 cases already found in London. Hancock noted that there is no evidence to suggest the new strain will be more lethal or immune to the vaccine, but the news increases the likelihood of stricter closures than is currently anticipated until the UK and other countries can vaccinate. their populations en masse. in the middle of next year.
Brexit Conversations: Where Are Things …
Last week, Sunday was heralded as an important day where, if no further progress had been made in the Brexit negotiations, the EU and the UK would have to make a serious decision about the future of the talks. With UK Prime Minister Boris Johnson and EU Commission President von der Leyen agreeing that the responsible course of action is to continue the talks (and thus not agree to end the talks as some feared), the GBP reacted positively to the reopening of currency trading during Monday’s Asia Session.
Furthermore, on the issue of governance, the EU is reportedly softening its stance on its right to implement “light tariffs” in the UK in the event that a breach of the level playing field is perceived to have occurred. and therefore it is getting a little closer to the position of the UK. But there is still no agreement on how the governance of the agreement should occur through independent arbitration, nor on the issue of fisheries.
Technical levels
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