GBP/USD stays defensive around 1.3400 as Brexit, Omicron test bulls at monthly top

• GBP/USD pauses three-day uptrend to consolidate recent gains inside a choppy range.
• France to extend Brexit fights over fishing licences to 2022, BCC conveyed Brexit woes for UK firms.
• British study cites lower hospitalization rate for Omicron, record virus cases.
• Firmer yields, light calendar and holiday mood to test cable traders.

GBP/USD adheres to consolidation of the recent gains, like other major currency pairs, during the quiet Asian session on Friday. The cable pair refreshed the monthly top to 1.3437 the previous day before recently taking rounds to 1.3410.

Fresh challenges to the GBP/USD prices could have come from the Brexit front, as well as firmer yields by the end of Thursday’s North American session. Holiday mood and light volume add to the trading filters.

Among the key Brexit negatives was news from France, conveyed by Reuters, “Litigation against Britain on the issue of post-Brexit fishing licenses will be kicked-off in early January, French Europe Minister Clement Beaune told France 2 television on Thursday.”

On the same line were the results of the British Chambers of Commerce (BCC) survey for October. The results mention that 45% of businesses found it very or relatively difficult to trade goods with the EU, up from 30% in January when the Trade and Cooperation Agreement (TCA) came into effect, per Reuters.

Elsewhere, multiple studies showing fewer odd of hospitalization due to Omicron, including those from the UK, joining the US Food and Drug Administration’s (FDA) approval to Merck's Covid-19 pill on Thursday to underpin the market’s risk-on mood.

However, French cancellation of orders for Merck’s pill, citing notable lesser effect than promoted, joins steady rise in Omicron cases to challenge the optimism. That said, Sky News mentions, “The Office for National Statistics said around 1.4 million people in the UK were probably infected with COVID-19 in the week ending 16 December, which is the highest figure since comparable records began in autumn 2020.”

Talking about the data, US Durable Goods Orders and PCE Price Index for November came in firmer but couldn’t reverse the previous run-up of equities and riskier assets despite favoring the US Treasury yields before the close.

While a light calendar and a reassessment of the risk catalysts seem to trigger the GBP/USD pullback, the holiday mood may restrict the quote’s short-term moves.

Technical analysis

A clear upside break of the monthly ascending trend line, near 1.3375, helps GBP/USD buyers to aim for the 50-DMA resistance surrounding 1.3450.