Boris Johnson and the German chancellor spoke earlier about the proposals he had put forward to the EU – but the source said she made clear a deal based on them was “overwhelmingly unlikely”. The European Union (EU) negotiators returned to Brussels after an intense round of departure talks, held in London, without any results on Friday. The British government has set October 15 as the deadline for the deal, failing to which a no-deal Brexit scenario will effect the Pound. Though, the latest updates suggest that the UK PM Johnson is also open to the Australia-style departure deal with the bloc.

Apart from the Brexit, the COVID – 19 also is a tough battle for the Borish Johnson to fight. Even if the reproduction number (R-value) recently being between 1.2 and 1.5, a tad lower from last week’s range of 1.3 and 1.6, total cases have surged to 590,00. Even worrisome is the fact that more than 50 people, 65 recently, died in the UK after testing the corona virus-positive during the first 28 days. He is not in idea to impose of lockdown as an aim to win the battle. A second COVID-19 relief package is an additional weapon used to combat the virus.

On the other hand, US President Trump’s U-turn on stimulus couldn’t impress the Democrats as they still reject the $1.8 trillion proposals. Hence, the battle for the much-awaited American aid package is likely to continue and may stretch beyond the next month’s US presidential election, which in turn weighs on the risks and stops the US dollar from further declines.

But the odds are growing that Democrat Joe Biden will be the next president, and elections would result in a blue sweep – Democrats controlling both Congress’ chambers, i.e., House of Representatives and the Senate.

Biden’s spending plan would boost the US debt by $5.6 trillion, while President Trump’s plan would increase the debt by $4.95 trillion, the Committee for a Responsible Federal Budget (CRFB).  As such, with polls showing a higher probability of Biden victory, bond markets are factoring in higher inflation expectations by pushing longer duration yields higher.

Elsewhere, S&P 500 Futures print mild gains whereas stocks in China benefit from the People’s Bank of China’s (PBOC) weekend moves. Further, Asia-Pacific shares also print small gains following equities in Beijing.

Moving ahead, the UK PM Johnson is about to speak with the regional leaders of the north about the stricter COVID-19 rules. The investors will be keen on the announcement to knowing the threat to the national lockdown. Further, BOE’s Bailey will also be closely followed to reconfirm his recent cautious optimism. It should be noted that the absence of the US traders will restrict today’s market moves until any major update.

GBP/USD 4 Hour Chart:

Support: 1.2958 (S1), 1.2867 (S2), 1.2822 (S3).

Resistance: 1.3094 (R1), 1.3140 (R2), 1.3231 (R3).

As today is US Bank holiday, we expect the Cable to show a bullish trend.