GBP/USD clings to 1.3300 as Omicron news battle Brexit fears, US NFP eyed

• GBP/USD holds onto the previous day’s rebound within a choppy range.
• EU-UK Brexit deal remains less likely in 2021, London-Washington jostle over post-Brexit trade terms.
• UK raises hopes to curb Omicron spread as daily infections jump over 50,000.
• Final reading of UK Services PMI may offer intermediate moves but nothing more important than US NFP.

Having snapped a three-day downtrend, GBP/USD wobbles around 1.3300 during the initial Asian session trading on the key Friday comprising the US jobs report for November.

The cable pair’s improvement could be linked to the market chatters that the UK steps forward to finding the cure to the South African covid variant. However, firmer US dollar ahead of the US Nonfarm Payrolls (NFP) joins Brexit woes to weigh on the quote.

In a landmark achievement for the British scientists, the UK Medicines and Healthcare products Regulatory Agency (MHRA) approved an antibody treatment that it expects to overcome the coronavirus variant such as Omicron. Sotrovimab is a single monoclonal antibody drug joined developed by GSK and Vir Biotechnology that gets the UK MHRA approval.

On the other hand, Irish Foreign Minister Simon Coveney crossed wires while signaling no Brexit deal between the European Union (EU) and the UK over the Northern Ireland (NI) protocol during 2021. However, Northern Ireland Secretary Brandon Lewis said he is optimistic to reach a deal but also cited the odds of triggering Article 16.

While the EU-UK Brexit deal is in limbo, the US-UK post-Brexit trade talks are also fragile as both the nations recently jostled over Washington’s failure to remove tariffs on UK steel and aluminum.

It’s worth noting that the final reading of the UK Manufacturing PMI for November came in softer than initial estimates, adding to the expectations that the Bank of England (BOE) will refrain from a rate hike during the December meeting. Even so, market chatters are on the spike that the “Old Lady” will supersede the Fed to announce the rate hikes.

Talking about the US, the benchmark US 10-year Treasury yields bounced off a 10-week low to regain 1.45% level, up five basis points (bps), on Thursday as Fedspeak pushed for sooner tapering in the last-ditched efforts before the silent-period starting from this Saturday. Among the key promoters of faster rolling back of easy money, also conveying reflation fears, were Federal Reserve (Fed) Bank of San Francisco President Mary Daly and Richmond President Thomas Barkin.

It should be observed that softer-than-expected prints of the US Initial and Continuing Jobless Claims for the week, as well as downbeat Challenger Job Cuts for November, add to the Fed rate hike concerns and favored the GBP/USD bears.

However, it all depends upon the US jobs report for November as the Fed policymakers brace for the crucial decision.

Technical analysis

A downward sloping trend line from late October, around 1.3325, guards the immediate upside of the GBP/USD prices ahead of early November’s low near 1.3355. Alternatively, the yearly bottom of 1.3194 stays on the bear’s radar.