GBP/USD: All eyes on the EU’s mandate for post-Brexit talks

• GBP/USD fails to hold onto the previous day’s losses.
• The EU is set to agree on the mandate for post-Brexit trade talks, the UK will present theirs on Thursday.
• Traders pay a little heed to the domestic politics amid broad risk reset on coronavirus headlines.

GBP/USD manages to recover 0.10% to 1.2940 while heading into the London open on Tuesday. While the coronavirus (COVID-19) headlines could be considered as backing the latest pullback, traders await the EU’s mandate for post-Brexit trade talks, up for signing by 27 members during today, for fresh impulse.

As per the BBC, all the 27 members of the European Union (EU) are set to agree on the bloc’s mandate for the key trade talks with the UK. However, those are less likely to recede tension as The Guardian spreads the news that the region is likely to propose penalties if Britain refuses to follow the Brussels’ rules.

The EU’s Brexit negotiator Michel Barnier has stated multiple times that the bloc won’t respect the Canada-style deal with the UK that Tories are looking for. However, fisheries are the main weapon that British PM Boris Johnson’s team could use. Also on the Brexit lines are the concerns over the border checks between the UK and Northern Ireland. Clues that the British government is secretly preparing to avoid checks at the Northern Sea recently pushed the Irish leader to reiterate warnings to the UK PM &Company.

Elsewhere, talks surrounding the UK’s Home Secretary Priti Patel and her immigration proposals keep trying to weigh on the British pound but failed. The reason could be found in the US dollar’s pullback amid receding safe-haven demand.

During the early Asian session, declines in the coronavirus-led death toll from China triggered risk reset.  The optimism got a boost from the Global Times’ headlines suggesting Tianjin University has successfully developed an oral vaccine to counter the COVID-19.

Traders will now keep eyes on the Brexit headlines as there is still a lack of clarity over the EU’s “level playing field”. Also important to the markets will the US data and coronavirus headlines.

Technical Analysis

A one-week-old falling trend line at 1.2952 and another one declining from January 31, near 1.2985, hold the key to the pair’s run-up towards a 200-bar SMA level of 1.3013. On the contrary, a three-day-long rising trend line near 1.2900 acts as the immediate support ahead of the monthly low of 1.2849.