GBP/USD: Brexit, coronavirus tests rebound above 1.3200, UK GDP, US inflation eyed

• GBP/USD portrays corrective pullback around yearly low, seesaws after three-day downtrend.
• UK says France won’t get full 104 fishing licenses, Ireland to raise Brexit concerns with Britain.
• British Health Minister Javid tried to placate ‘Plan B’ fears, BOE rate hike expectations were pushed back.
• UK data dump for November precedes US CPI to decorate calendar.

GBP/USD licks its wounds near 1.3220 amid a quiet Asian session on Friday. The cable pair dropped during the last three days as Brexit and coronavirus updates offered a double whammy of attacks towards the south, which refreshed yearly low. However, the traders seem to turn cautious ahead of the key data releases from the UK and the US.

Having announced the re-introduction of the virus-led activity measures and promoting the work-from-home culture, the UK policymakers tried to tame pessimism spreading from their actions. In doing so, the UK Health Minister Sajid Javid said that ‘Plan B’ is designed to slow down the spread of the Omicron variant.

However, the markets did believe in them as the CME’s BOEWatch Tool signals the delayed rate hike in 2022 than the previously conveyed. On the same line were Goldman Sachs and Reuters’ poll.

Not only the virus-linked fears but Brexit chatters are also weighing on the GBP/USD prices. After initial peace, the UK and France are again at loggerheads over the fishing terms as the UK Daily Telegraph quotes Britain rejecting the French demand to approve all 104 licenses. Additionally, iTV conveyed the news that the ex-Irish PM Leo Vardakar mentioned Ireland’s likely push to the UK for altering Brexit terms that negatively affect the nation.

On a broader front, mixed updates concerning the South African covid variant, namely Omicron, joined geopolitical fears surrounding China and Iran to weigh on the market sentiment. However, the US dollar benefits from the increasing bets on the Federal Reserve’s faster tapering.

That said, Wall Street benchmarks closed in the red while the US 10-year Treasury yields drops 1.2 basis points to 1.497% by the end of Thursday’s North American session.

Looking forward, a heavy economic calendar will entertain the GBP/USD traders even if the bulls have little hope of return. “October GDP is expected to have risen 1.0%mth, with industrial production up 0.1%. The trade deficit is expected to narrow slightly in October, but significant uncertainty remains given Brexit and COVID-19 (market f/c: -£2.4bn),” Westpac said ahead of the events.

Read: US Consumer Price Index November Preview: Inflation is the new cause celebre

Technical analysis

GBP/USD bears remain hopeful as a downward sloping trend line from October 28 restricts immediate upside around 1.3230.