GBP/USD: Below 1.2300 with eyes on UK jobs report, coronavirus stimulus

• GBP/USD bears catch a breath near the lowest levels since October 2019.
• BCC anticipates the slowest UK GDP growth since GFC.
• Chancellor Rishi Sunak to join PM Johnson in today’s coronavirus conference, expected to unveil a "significant financial package".
• UK/US data could also offer intermediate moves.

Following its drop to the lowest in five months, GBP/USD struggles for direction while taking rounds to 1.2255, down 0.15%, before the London open on Tuesday. While a jump in coronavirus (COVID-19) cases seems to be the key catalyst behind the pair’s earlier drop, traders seem to await expected stimulus measures to counter the pandemic as well as the UK employment data for fresh impulse.

With the addition of 18 deaths in the previous 24 hours, the Cable sellers jumped on the table on Monday. Given the government’s wrong strategy to confine the pandemic, the Tory administration will now take measures to rectify the mistake with much care.

In doing so, the UK PM Boris Johnson may use some strong words during his daily coronavirus press conference. However, important of them will be the presence of Chancellor Rishi Sunak who is anticipated, as per the Daily Mail reporter, to unveil a "significant financial package" on Tuesday for firms hit by the coronavirus outbreak.

Additionally, February month UK employment data, as well as the US Retail Sales, will also be the key to follow. Concerning this, TD Securities said, “In the UK, the Jan ILO unemployment rate is expected to hold steady at 3.8%. The labor market has remained strong in the UK despite growing uncertainties. This read predates the spread of COVID-19 in Europe. Several releases are due in the US. The first will be February retail sales, which Westpac expects will increase by 0.3%. COVID-19 disruption in the latter part of the month should be offset by earlier precautionary spending.”

Market’s risk-tone seems to undergo a reset following the fresh stimulus from New Zealand and extended bond-buying from the BOJ. Also helping the risk recovery could be comments from Japan to coordinate with China and South Korea to tackle the pandemic. That said, the US 10-year treasury yields rise five basis points (bps) to 0.775% whereas stocks in Asia also mark mild gains by the press time.

Although the economic calendar is also active during the day, markets will pay more attention to the COVID-19 headlines and the global efforts to tackle the pandemic.

Technical Analysis

With Monday’s Doji raising doubts on the pair’s further downside, buyers will look for entry beyond the previous day’s top of 1.2425 to target 61.8% Fibonacci retracement of the pair’s September-December 2019 upside, around 1.2555.