GBP/USD sellers attack 1.3400 amid Brexit chatters, UK jobs data eyed

• GBP/USD fades bounce off yearly low, retreats from one-week high.
• UK PM Johnson shows readiness to trigger Article 16 but says agreement with EU is still possible.
• Worsening covid conditions renew talks over British lockdown.
• Brexit talks, virus developments and UK/US data to entertain traders.

GBP/USD remains pressured towards the 1.3400 threshold, around 1.3415 during early Asian session Tuesday, as pessimism surrounding Brexit and the UK’s coronavirus conditions join the pre-jobs data anxiety. In doing so, the cable pair ignores hawkish comments from Bank of England (BOE) Governor Andrew Bailey.

Having earlier said that their aim remains to reach a consensual solution on to the Northern Ireland protocol, as reported by Reuters, UK Prime Minister Boris Johnson mentioned that the deal with the European Union (EU) is still possible. Intensive Brexit talks are on and the latest chatters surrounded the British readiness to trigger Article 16, the key clause to unilaterally avoid Brexit compliance over the Northern Ireland (NI) borders.

Elsewhere, BOE Governor Bailey also crossed wires, via Reuters, while saying that all future BoE policy meetings are now “in play” for a rate rise. The policymaker refrained to vote for an immediate end to the bank’s QE program during the latest monetary policy meeting and surprised markets. However, the jump in the inflation expectations and rate hike calls, per the CME’s BOEWatch indicator, highlights the hawkish case for the GBP/USD traders.

However, the recently peaking COVID-19 numbers in the UK and Europe raise concerns over the “Old Lady’s” early stop to the easy money and hence challenge the rate hike views. The same highlights today’s UK jobs report for fresh impulse. That being said, the headlines Claimant Count Change for October may have to improve from the previous -51.1K forecast to keep the GBP/USD buyers hopeful. Supporting the optimists is the upbeat market consensus over the ILO Unemployment Rate for three months to September, expected 4.4% versus 4.5% prior. Though, the Average Earnings are likely to be easy and may test the bulls.

On the other hand, the Fed rate hike concerns renew amid a jump in the US inflation expectations. However, the hawks may wait for the US Retail Sales for October, expected to reprint the 0.7% MoM growth.

Read: US Retail Sales October Preview: Inflation Is the key, not Retail Sales

It’s worth mentioning that the market sentiment dwindles and helps the US Dollar Index (DXY) to refresh multi-day top but sluggish equities test the momentum traders on a key day.

Technical analysis

Monthly descending trend line near 1.3465 guards the immediate upside of the GBP/USD prices before a one-month-old horizontal hurdle around 1.3565-70. Alternatively, the 1.3400 and a downward sloping support line from April, around 1.3340, become the key to watch.