GBP / USD weakens from 21-DMA as UK battles Omicron, Q3 GDP and Brexit talks

• GBP / USD updates intraday lows and steps back from weekly high.
• Britain’s truss will hold initial Brexit talks with Å efčovič from the EU.
• UK, which cuts COVID-19 self-isolation time, rules out tougher lockdown before Christmas.
• Omicron updates, Brexit news and UK GDP in the third quarter can keep traders entertained ahead of US data.

GBP / USD is pulling back from the 21 DMA level around 1.3270 and is down 0.05% near 1.3262 early Wednesday. The cable pair hailed the market’s optimism the previous day for initiating a two-day downtrend. However, fears of Brexit and the rise in Covid cases are questioning the UK government‘s efforts to appease the bears ahead of UK GDP levels in the third quarter.

A 63% increase in the total number of Covid cases in the seven days leading up to Jan.

British Prime Minister Boris Johnson ruled out tougher lockdown measures before Christmas. Health Minister Sajid Javid also mentioned a reduction in the virus-related self-isolation time from 10 to seven days. It’s worth noting that British Chancellor Rishi Sunak unveiled £ 1 billion relief for companies harmed by the Omicron.

Elsewhere, the newly appointed Brexit Minister Liz Truss said, according to Reuters: “London’s position has remained unchanged and the process must be accelerated in the new year.” The Guardian quoted the British Truss as saying that she would be with her EU colleague MaroÅ¡ Å efčovič speak to once again call for the disputed Northern Ireland Protocol to be disrupted. It is worth noting that the article also mentions: “In the last days before Christmas, until the surprise resignation of Lord Frost, Boris Johnson’s former chief Brexit negotiator, no talks between the EU and the UK were planned. It is worth noting that the UK recently signed a fisheries agreement with Norway but did not satisfy local companies.

On the other hand, US President Joe Biden is pushing for more vaccinations and sounds cautiously optimistic during the national address. The US leader also said on The Hill, “I think there is still a possibility that his Build Back Better agenda, despite Sen. Joe Manchin’s rejection of the Climate and Social Spending Act. “

It’s worth noting that the news that the U.S. Food and Drug Administration (FDA) is poised to approve a pair of Pfizer and Merck pills to treat Covid-19 backed risk appetite as early as this week, according to Bloomberg sources favored the GBP / USD buyers. The recent rebound in inflation expectations, as measured by the 10-year breakeven inflation rate according to data from the St. Louis Federal Reserve (FRED), is also testing the pair’s upward trend.

However, cautious sentiment ahead of key US / UK data and Brexit fears seemed to have challenged GBP / USD buyers lately. The final UK GDP reading in the third quarter is expected to confirm 1.3% earlier forecasts, with a range of US data likely to rock cable prices. Key US data includes final GDP for the third quarter and CB consumer confidence for December.

Read: Conference Board Consumer Confidence December Preview: Where Do Americans Turn For Optimism?

Technical analysis

While the 21-DMA level around 1.3270 is constraining the immediate uptrend for the GBP / USD pair, a downward trendline from September near 1.3310 becomes crucial for short-term buyers. Meanwhile, the 1.3170-60 area, which encompasses the year’s low, is a tough nut to crack for bears.